Hershey Ousts Board

All but two of the 10 members of the Hershey Co. board resigned on Sunday, in a sweeping overhaul of the company's board, indicating differences between management and the Hershey Trust, which controls about 78% of Hershey's voting shares. The news comes after trust members held preliminary merger talks with Cadbury without CEO Richard Lenny, who ultimately resigned several weeks ago because of lack of autonomy in the company. Unnamed sources say Sunday's changes do not make a potential deal any more or less likely. The trust named replacements on Sunday and shareholders will elect two additional board members next year. Kenneth Wolfe, a former Hershey CEO, was named non-executive director and will replace Lenny as chairman Jan. 1. New board members include Stone Point Capital CEO Charles Davis, a veteran of Goldman Sachs, and Edward Kelly, managing director of private equity firm The Carlyle Group. Once Hershey's limited-edition item strategy ran out last year, competitor Mars Inc. was able to steal market share. Citing increased competition, high dairy costs and restructuring charges, the company said last month that its Q3 net income dropped 66% and revenue fell 1.2%. "This seems like action for action's sake," said Walter Todd of Greenwood Capital Associates. "It's not the board of directors that underinvested in advertising for the last five years. Honestly, this won't change the loss of market share or competition from Mars."

Sources: Press release, Wall Street Journal, Reuters, Bloomberg
Commentary: Hershey CEO Kisses Company Goodbye • Eight Halloween Stock Tricks.... I Mean Picks • Hershey: Sweet Dividend Increases, Sour Equity Growth Rate
Stocks to watch: HSY, CBRY. Competitors: TR, RAH

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