Hershey Co, the U.S. chocolate maker that Oreo cookie-maker Mondelez International Inc tried to acquire earlier this year, said on Friday that Chief Executive John Bilbrey would retire from his post on July 1.
The move comes less than three months after the charitable trust that controls Hershey reached a major reform agreement with its overseer, the Pennsylvania attorney general's office, raising questions about the trust's plans for the company.
The selection of the new CEO could determine not just the company's financial performance, but also whether the trust will continue to rely on Hershey as its main asset. About two-thirds of the trust's $12 billion in assets are in Hershey stock.
During Bilbrey's five-year tenure as CEO, Hershey doubled its market value to $20 billion, improved its profit margins, and increased its market share in the United States to 31.3 percent from 28.3 percent. Hershey also began to diversify beyond its core confectionary business into other types of snacks.
The Kisses chocolate maker said on Friday it appointed a special committee to search for a new CEO. The committee will be led by Pamela Arway, chairwoman of the board's governance committee, helped by executive search firm Egon Zehnder.
The committee is considering internal and external candidates for the CEO job, and Hershey Chief Operating Officer Michele Buck is one of the contenders, according to people familiar with the matter who asked not to be identified discussing confidential deliberations.
Bilbrey will continue as non-executive chairman of the board following his retirement as president and CEO, Hershey said. The company also maintained its full-year earnings outlook.
Reuters reported exclusively on Thursday that Bilbrey was preparing to step down by next summer.
"All of the decisions in my career have been made in consultation with my wife, Teresa, with the impact to our children and our family being paramount. And so it is with that in mind that I have shared with our board, and now you, my decision to retire next year in order to spend more time with my family and wonderful grandchildren who have faithfully and selflessly supported me for so long," Bilbrey wrote in a note to Hershey employees on Friday.
Bilbrey was named CEO of Hershey in 2011 after serving in various senior roles at the company since 2003. He added the position of chairman in 2015. Prior to Hershey, Bilbrey worked for 22 years at consumer company Procter & Gamble Co.
Following an initial spurned bid in June, Mondelez CEO Irene Rosenfeld re-approached Bilbrey in August, indicating that Mondelez would be willing to offer $115 a share, or about $24.5 billion overall, Reuters reported at the time.
Hershey responded that it would not be willing to enter into deal negotiations for an offer of less than $125 per share, a source said at the time. The Hershey trust was set up by the company's founder over a century ago to fund and run a school for underprivileged children. It holds 81 percent of the company's voting stock, and so a sale is not possible without its approval. Following a dispute with the Pennsylvania attorney general over its governance policy, the trust in July agreed to expand its board to 13 members from 10, and for five members to resign by the end of the year.
With one trustee having resigned shortly before that agreement, that leaves a total of nine openings.
"Everybody wants clarity. The more ambiguity there is about a situation, the more difficult it is to recruit into it," said Peter Crist, chairman of recruiting firm Crist Kolder Associates, referring to the impact the turnover at the Hershey trust will have on the Hershey CEO search. Even if the trust does decide to explore a sale of Hershey, the attorney general can thwart such plans.
On Friday, one of the people who agreed to resign from the trust's board by the end of the year, James Nevels, said he would not stand for re-election on Hershey's board in 2017. Nevels currently serves as Hershey's lead independent board director.
(Reporting by Greg Roumeliotis and Lauren Hirsch in New York; Additional reporting by Siddharth Cavale in Bangalore; Editing by Bill Rigby, Sam Holmes and Ted Kerr)