NEW YORK (AP) ? The founder of Green Mountain Coffee Roasters Inc., who was ousted as chairman for a stock sale that violated company policy, said the sale was triggered after he was caught off -guard by a swift drop in the coffee maker's stock price.
Robert Stiller, who also has dumped his $50 million stake in Krispy Kreme Doughnuts Inc., said in an interview Wednesday that he didn't expect Green Mountain's shares to fall so steeply last week. The decline forced him to sell the shares on a margin call, but it occurred during a blackout period in which the company prohibits the sale of its stock by insiders.
When a person borrows cash and puts a stock portfolio up as collateral, they are subject to margin calls. When share prices take a tumble, making the collateral worth less, banks require borrowers to cover the gap. Green Mountain, which produces coffee and the Keurig single-cup coffee maker, saw its stock lose roughly half its value last week after the company lowered its profit forecast due to slower sales growth. That followed a fall earlier this year after rival Starbucks Corp. announced plans to introduce its own single-cup brewing machine in time for the holiday season.
Stiller said he received a call from Deutsche Bank on Friday about an hour and a half before the market closed, telling him that he needed to come up with cash or sell shares.
"They changed what they would lend to me from 60 percent to 30 percent," Stiller said.
He liquidated his other positions, including his stake in Krispy Kreme, as a result. A filing with the Securities and Exchange Commission on Wednesday shows Stiller sold his 8 million shares of Krispy Kreme at a price of $6.15 each. Stiller was the second-largest shareholder of Krispy Kreme, according to FactSet. A representative for Krispy Kreme could not immediately be reached.
Stiller, who founded Green Mountain in 1981 and served as the company's president and CEO until May 2007, noted that he is retired and that his stock portfolio is his main source of income. As for reports that he leads a lavish lifestyle, he said he bought a yacht five years ago because he enjoys traveling and being on the water with friends.
"Maybe I shouldn't do these things, but I've worked my life building this company and it's been successful," said Stiller, 68. "I want to enjoy it. Whether it's living lavishly, I think that's all relative."
On Tuesday, Waterbury, Vt.-based Green Mountain said it was removing Stiller and lead director William Davis from their leadership roles and suspending their pay indefinitely because of stock sales that violated company policy. Due to the quick drop in the company's stock price both men faced margin calls that forced them to sell a total of more than 5.5 million shares.
In 2011 Stiller received compensation worth $175,296 for sitting on the board, including option awards worth $74,296 and $50,000 in fees for serving as chairman, according to Green Mountain's proxy filing with regulators in February. Davis received cash-and-stock compensation of $164,296 for the year, including lead director fees of $15,000.
Stiller said Green Mountain was aware that his stock served as collateral in a margin account. However, Green Mountain bars individuals with inside information from trading its stock during certain periods. The company said it is requiring Stiller and Davis to settle all their outstanding margin loans by the end of this year.
Stiller now owns roughly 8.34 million Green Mountain shares, the company said. If he sold all the stock in his margin accounts, his stake would shrink to about 1.9 million shares. Davis owns 436,786 shares, and his stake would shrink to 36,598 in that scenario.
Shares of Krispy Kreme rose 34 cents, or 5.4 percent, to $6.69 in afternoon trading. Green Mountain shares fell 26 cents to $26.12 in afternoon trading. The stock is now down over 77 percent since reaching its year-high of $115.98 last September.
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