Shares of Charlotte-based snack maker Snyder’s-Lance closed down 15 percent Monday after the company announced that CEO Carl Lee Jr. had retired unexpectedly.
The manufacturer also said it has faced “difficult challenges” that have weighed on first-quarter earnings.
Lee, 57, had been with the company for almost 12 years. Brian Driscoll, former CEO of Diamond Foods and a member of Snyder’s-Lance’s board, has stepped in as interim CEO.
The company said in a statement it will launch a national search for a permanent replacement for Lee, adding Driscoll is a “strong candidate” for the position.
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“With increased focus on margin expansion and profitable growth, we are confident that Brian has the skills to address some of the recent performance challenges, as well as drive the company to a level of profitability more in line with the expectations of our shareholders,” said James Johnston, the company’s chairman.
The company – known for Snyder’s of Hanover pretzels and Lance peanut butter sandwich crackers – did not say whether its recent financial performance was the reason for Lee’s early retirement.
In a research note Monday, SunTrust analyst William Chappell said the departure was unexpected and that the company’s lower-than-expected first-quarter results didn’t appear to be reason enough alone for a forced exit.
“We are surprised by the timing of the departure as we spent a fair amount of time with Carl over the last few months and we had expected that he would stick around for the next few years,” Chappell said.
Snyder’s-Lance said late last year it was investing $38 million to expand its Charlotte facilities, where it will add 130 new jobs over the next five years. The company did not immediately respond to questions about whether the expansion will be affected.
Alex Pease, the company’s chief financial officer, said Snyder’s-Lance has faced “difficult challenges” during the first quarter that have negatively impacted earnings.
Increased investments in promotional and marketing spending, he said, hurt performance and “more than offset” cost-savings from the company’s 2016 purchase of Diamond Foods, known for brands such as Kettle potato chips, Pop Secret popcorn and Emerald snack nuts. Under Driscoll’s leadership, the company is moving aggressively to improve earnings, Pease said.
For the first quarter, Snyder’s-Lance expects earnings to be between 11-12 cents per diluted share. The Company expects net sales in the range of $530 million to $532 million. The company said it doesn’t plan to release preliminary financial results on an ongoing basis.
Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said it’s not “unreasonable” to link the abrupt departure of a CEO to questions about performance.
“To me, it’s a sign of an active board that they take such a step,” Elson added. “When a CEO goes, all kinds of questions, problems come out of the woodwork that the board will have to respond to.”
Lee was the CEO of Snyder’s of Hanover from 2005 until December 2010, when the Pennsylvania company merged with Charlotte-based Lance. Lee then became the merged company’s chief operating officer, and later assumed the role of CEO in May 2013.
In 2016, he made $3.46 million in total compensation, which included his salary, stock awards, stock options, bonus and other compensation, according to a securities filing last month.
In recent years, Snyder’s has been expanding its selection of “better-for-you” offerings with acquisitions such as Diamond Foods, where Driscoll had been CEO. Snyder’s-Lance said late last year it was selling Diamond Foods’ nut business to a private equity firm, while keeping other Diamond products.
After dropping nearly 20 percent earlier in the day, the company’s shares finished down 15.43 percent at $33.76 on Monday.