Green Mountain Finance & Audit Committee Disaster

Green Mountain Coffee Roasters

Image via Wikipedia

Green Mountain (GMCR) issued a press release indicating they need to restate their financials going back to 2007. Not very impressive but the company is doing the correct thing.

Where the Green Mountain spin team falls apart is the sequence of events. Green Mountain responded to an SEC investigation initially. Not sure yet how SEC found out or what made Green Mountain light up on the radar but the SEC did it’s job.

The press release spins the sequence differently. Read this snippet from the second paragraph

“As discussed below, these errors were discovered by management during the course of its preparation of the year-end financial statements and audit, as well as during the course of an internal investigation initiated by the audit committee of the Company’s board of directors in light of the previously disclosed inquiry by the staff of the Securities and Exchange Commission’s (“SEC”) Division of Enforcement”

I don’t appreciate the spin. Green Mountain and their auditors Pricewaterhousecooper LLC missed it until they were awakened by the regulators. Now they are covering themselves with desperation credibility.

Who are the directors responsible? Here is the Audit and Finance Committee:

  1. Michael Mardy
  2. Barbara Carlini
  3. William Davis
  4. Jules Del Vecchio

Only Michael Mardy has any financial background. So you have to wonder why the other three are on the committee? Then when you dig around Michael Mardy was previously the CFO of Green Mountain. Now he has director’s responsibility over the area he used to manage. This committee was poorly constructed. Not a surprise that they experienced regulatory problems.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.