Hershey Co. CEO Bilbrey to resign; more turmoil at top of rich charity
Bilbrey, 60, told the Hershey Co. board Thursday that he would resign on July 1, 2017, and the company disclosed the decision Friday.
Hershey Co. CEO John Bilbrey is stepping down from the iconic Pennsylvania company, even as the firm’s controlling shareholder, the $12.5 billion Milton Hershey School for impoverished children, faces its own board-level turmoil.
Bilbrey, 60, told the Hershey Co. board Thursday that he would resign on July 1, 2017, and the company disclosed the decision Friday. News of the planned departure comes just weeks after Hershey rejected a takeover from rival Mondelez International Inc. Bilbrey will continue as non-executive chairman after he steps down as chief executive officer and president. The company board hired the executive-search firm Egon Zehnder to look for his replacement.
Erin Lash, senior equity analyst with Morningstar Inc., said on Friday the "most likely" internal candidate to succeed Bilbrey was Michele Buck, who was promoted to executive vice president and chief operating officer at the Hershey Co. in June.
"We still view it as highly unlikely that [Hershey] will pursue a big deal," Lash said. She noted the need on the part of the 2,000-student Hershey School for the cash from Hershey Co. stock dividends to run its educational programs. Debt to close a big acquisition could threaten that Hershey Co. dividend stream.
In a research note on Friday, UBS analyst Steven Strycula wrote that the Hershey Co. faces intensifying competition in the U.S. confection industry and must find a profitable distribution solution for its underperforming China business. Also he wrote in the report: "We believe Hershey needs to outline a more detailed go-forward strategy."
Bilbrey, who joined the Hershey Co. in November 2003 and was compensated $10.8 million in 2015, is leaving a difficult situation.
Hershey declined a $23-billion offer from Mondelez in late August as other candy and food companies -- facing shifting consumer tastes in a low-growth industry -- are busy merging and consolidating operations on a global scale, leading its stock to plunge more than $15.
Mondelez initially bid $107 a share for Hershey stock and then reportedly boosted the offer to $115 a share. On Friday, Hershey stock closed at $96.47, up 82 cents.
Meanwhile, the board of the controlling shareholder in the Hershey chocolate company, the charitable trust that finances the Hershey School, is being reconstituted as part of a settlement with the Pennsylvania Attorney General's Office. The settlement was reached in late July. The investigation looked into compensation among board members, travel, governance, and board tenures.
Five of nine trust board members will resign by next December. Nine new members could join the trust board over the next 18 months, based on the attorney general's settlement. The trust has a voting control of 80 percent of the chocolate company.
The Hershey chocolate company is the biggest asset in the $12.5 billion trust that finances the school, one of the nation's richest child charities.
“Now is the right time to begin the process of handing over the reins as CEO as it will allow me to spend more time with my family and wonderful grandchildren,” Bilbrey said.