Chiquita Brands International chief executive Fernando Aguirre, the public face of the company and the architect of its move to Charlotte, will leave the company as soon as a replacement is found, the banana giant said Tuesday.
The surprise announcement comes as Chiquita continues to struggle, reporting falling profits and revenue. The company, which is relocating from Cincinnati to uptown Charlottes NASCAR Plaza, also said it will cut $60 million from its annual expenses, by cutting its research and development budget and downsizing. The company plans to cut 310 positions, some of those senior management.
Thats less than 1 percent of the companys workforce, but it could have an outsized impact on headquarters and management positions since most of Chiquitas 21,000 employees work outside the U.S., on the companys Central American banana plantations.
Last year, Charlotte lured Chiquita with more than $22 million worth of state and local incentives, mostly tied to the companys job-creation goals. The incentives are enough to cover Chiquitas moving costs. Aguirre, 54, said in past interviews that the company would bring about 400 high-paying jobs, of which about 200 would be local hires.
Charlotte will lose about 15 jobs at its new headquarters, Aguirre told the Observer late Tuesday.
Company spokesman Andrew Ciafardini said the company has hired 158 new employees for Charlotte, and more than 150 will relocate to the city by the end of September. The great majority of positions that will be affected by the restructuring are in operations outside the state of North Carolina, Ciafardini said in an email.
Charlotte Chamber president Bob Morgan said Chiquita must meet its hiring goals to get the incentive money. If the jobs promised do not come to Charlotte, the incentives do not get paid. Downsizings are always painful yet sometimes necessary. It is in Charlottes best interest for Chiquita to do what it needs to do to return to profitability, Morgan said in a statement.
The incentives money is tied to job creation. The headquarters must remain in Charlotte for 10 years, the average salary must be more than $100,000, and the company needs to keep 90 percent of its jobs in the city for 10 years.
Aguirre will remain in his current role as chairman and CEO until a replacement can be found, he said Tuesday.
Also Tuesday, the company reported its second-quarter earnings. Chiquitas revenue fell 4 percent compared with a year ago, to $833 million. Profits for the quarter plunged to $6 million, down 92 percent compared with the same quarter last year. Chiquita earned 12 cents per share, well below analysts consensus estimate of 33 cents a share for the quarter.
Chiquitas banana sales, the companys largest business revenue producer, were down as difficulties in Europe hurt demand. The companys salad line, Fresh Express, also suffered lower sales.
Company executives told analysts and investors that they would focus on repaying the companys more than $550 million in debt and not buy any more businesses or experiment with diversifying product lines. Fresh Express was the companys largest acquisition: Chiquita spent $855 million to buy the salad company in 2005. Aguirre has advocated for diversifying the company, and told the Observer that he believes Chiquita needs to add new product lines such as its dried fruit chips while still remaining strong in its banana business.
But on Tuesday, he repudiated that strategy. In the past we have invested heavily in diversifying, innovation and new business lines. We will defer any new diversification efforts besides bananas and salads, Aguirre said during a conference call.
We plan to limit future investments to areas where customers see value and pay us a profitable price.
He also said the company plans to cut its overhead to the bare essentials and will not spend any more significant amounts of money on banana research and development. The move represents a long-term shift designed to transform Chiquita into a low-cost, high-volume fruit company.
Investors reacted positively to the news. Chiquitas stock was up 15 percent in aftermarket trading late Tuesday, at $6.05 a share.
Aguirre already had become one of Charlottes most visible CEOs, speaking to groups of executives, announcing Chiquitas sponsorship of a local golf tournament, and unveiling the companys blue-and-yellow logo atop the NASCAR Plaza tower.
He also posts frequently to Twitter, sending job application advice to Charlotteans interested in working at Chiquita and posting pictures of the companys new snacks, offices, and even pictures of his search for a new house.
He had recently moved to Charlotte, and told the Observer he was leasing a house while preparing to build a permanent home in the city. Mecklenburg County property records show he and his wife paid $1.3 million for a home site in south Charlotte. He said Tuesday he plans to stay in Charlotte.
Aguirre also went on the CBS show Undercover Boss, learning to operate a salad-making machine alongside his unsuspecting employees.
Aguirre, who was born in Mexico and became a U.S. citizen about two years ago, spent decades as a Procter & Gamble executive before being named to head Chiquita nine years ago.
He began his tenure in the wake of a scandal in which Chiquita was fined $25 million by the U.S. Justice Department for paying off guerillas classified as terrorist groups in Colombia. Chiquita maintains it was extorted, and was trying to protect its workers rights. A class-action lawsuit against Chiquita by relatives of victims of the guerillas is pending.
While the company readied for its move to Charlotte, Aguirre suffered some setbacks. Chiquitas stock has fallen sharply over the past few years, as revenues and earnings stagnated. Revenue fell from $3.5 billion in fiscal 2009 to $3.1 billion in 2011, and profits fell from $91 million to $57 million.
The companys stock is off about 80 percent from its five-year high of $25.77 a share, leaving investors frustrated.
In May, shareholders voted against Aguirres compensation package. Aguirre was paid nearly $6 million in fiscal 2011, most in the form of a $4.8 million stock award and $1 million salary. He did not receive a cash bonus. Aguirres total pay package increased from 2010, when he was paid $5.6 million.
The nonbinding vote was an embarrassment for the company: Only about 2 percent of publicly traded companies have failed so-called say-on-pay votes. Although the company didnt have to change Aguirres compensation, it clearly indicated that investors werent happy with Chiquitas performance.
Aguirres transition agreement with the company specifies that he will remain employed as a consultant with Chiquita for 12 months after a new CEO is found, earning $40,000 a month.
His employment agreement shows he could also be eligible for a $4.7 million severance payment.
Staff Writer Andrew Dunn contributed.