Six More Lose Jobs in Krispy Kreme Scandal

Jun 22, 2005
George Anderson

By George Anderson

Six Krispy Kreme executives have lost their jobs in connection with the government’s investigation into accounting fraud at the company.

Last week, a special committee of independent directors for the company recommended that the six, including four senior vice presidents working in operations, finance, business
development, and manufacturing and distribution, be dismissed.

Five of the six resigned while the last retired from Krispy Kreme.

Krispy Kreme’s announcement of the executives’ departures follows former CEO Scott Livengood’s ouster in January.

Peter James Hall, who oversees $1 billion for Hunter Hall Investment Management in Australia (the company holds 4 million shares of Krispy Kreme stock), told Bloomberg News
he was encouraged by the latest news. “I’m very pleased they’re taking such serious action. The most important thing is that the special committee reports and the company reports
its financial statements, and then we move on to the next phase of the evolution of the company.”

On Mr. Hall’s last point, a column by Herb Greenberg on the MarketWatch Web site questions what is really going on at Krispy Kreme.

Mr. Greenberg writes that the company “hasn’t filed its financial statements with the SEC since last September. It recently warned the delays will continue in the fiscal first
quarter, which (surprise, surprise) will show a loss.”

He further questions why Krispy Kreme has yet to hire a permanent CEO to lead the company and why it hasn’t rolled out any new products, implemented an ad campaign or appears
“to have done much of anything to help its franchisees.”

At the rate it is progressing, suggests Mr. Greenberg, Krispy Kreme “might as well bring back Scott Livengood.”

Moderator’s Comment: Are the corporate scandals that have come to light in recent years, including that at Krispy Kreme, indicative of a lack of moral
values in America’s corporate suites?

– George Anderson – Moderator

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5 Comments on "Six More Lose Jobs in Krispy Kreme Scandal"

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Ryan Mathews
15 years 8 months ago

How did we get there? Krispy Kreme may arguably be an example of mismanagement but it’s not the root of all corporate moral evil. As for the Greenberg comments: restructuring companies (at least in this kind of restructuring) don’t appoint permanent executives, they hire fiduciary teams to straighten things out and then recruit the talent which otherwise might run from a troubled company; Krispy Kreme achieved cult status without spending a dime on advertising; the core product is the oldest item; and it clearly is time for new leadership.

Karen Kingsley
Karen Kingsley
15 years 8 months ago

Moral values has become such a loaded term in the US lexicon, I hesitate to engage in this conversation using that term. I do think there is a shortage of ethics in US corporations. In the “anything goes” ’80s, we created a culture in which winning was everything, and too many stockholders and boards sacrificed long-term planning and investment for short-term results.

Executives were promoted on their ability to deliver. So it became clear to even the dullest manager what had to be done to get ahead. I think some fundamentally ethical people got caught in a culture that didn’t always reward ethical behavior. And those without ethics were able to succeed because they were rewarded for the results at any price culture. One can only hope that a few jail sentences will alter the culture.

Celeste Kososki
Celeste Kososki
15 years 8 months ago

“Moral values” have been supplanted by stock analysts’ expectations. Even a spectacular rise can’t be sustained if The Street doesn’t relent on its unreasonable demands for returns. Until Wall Street acknowledges that it’s helped to create the crisis in ethics, we will continue to see businesses managed for the short-term results and the opportunity for inappropriate actions and individual greed will follow suit.

Bernice Hurst
15 years 8 months ago
Based on what I read about the mobs descending on each new branch of Krispy Kreme when it opened, I really wonder why these people felt that it was necessary to cheat. It sounded as if they had a successful and popular business. It seems more than a shame that a few greedy executives should have been able to pull down a business that could have continued to develop and make money in its own right. I’m sure the same holds true for many other organisations where a minority have felt that fast tracking their own personal gain was more important than playing by the rules. You can’t always blame the parents; most of these guys were probably raised by well meaning, well behaved and responsible adults. But the fact that they deviated from the path of righteousness does make me sympathise with the frustration felt by parents and teachers everywhere and wonder what on earth can be done about it. As for being indicative of a lack of moral values, I have to say… Read more »
Jaime Marin
Jaime Marin
15 years 8 months ago

It saddens me to see that greed is one of the main drivers in our culture. White collar criminals have gotten away with their crimes for such a long time, that they think they are untouchable. I really hope that this mentality changes soon and that our laws become a lot tougher in this arena.


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