The iconic maker of glazed donuts has forced out a number of executives in the wake of an accounting scandal.
Independent directors created a half-dozen job vacancies among its executive ranks as an investigation into accounting irregularities continues.
The Winston-Salem-based food company now faces multiple federal probes into its accounting and business practices. The Securities and Exchange Commission and the US attorney’s office with the Southern District of New York have been investigating the company.
Four of the six discharged from Krispy Kreme were vice presidents in the operations, finance, business development, and manufacturing sections. One of the six took retirement while the other five were discharged.
Those positions will be filled for the time being by internal personnel. At present, the company has not named those discharged. That may not matter, as one analyst has speculated today’s events are just a taste of the donut’s glaze.
“The sudden removal of these executives points to far reaching abuse within the former management ranks of this company,” wrote J.P. Morgan’s John Ivankoe in a note to investors Tuesday, as cited in MarketWatch.
“We also see this announcement increasing the likelihood of significant findings from current SEC and Department of Justice investigations.” Krispy Kreme has stated it is cooperating fully with investigators from both federal departments.
Investigations focus on the company’s practice of buying back franchises. The compensation paid by Krispy Kreme to managers when doing franchise buybacks has caused the firm to announce a restatement of past financial numbers.
That cost previous CEO Scott Livengood his job, and Stephen Cooper replaced him.
It’s a sad turnaround for the company, which had been a media darling. The warm glazed donuts even got several celebrity mentions from the likes of Shaquille O’Neal.
David Utter is a staff writer for Murdok covering technology and business. Email him here.
