What: Shares of Pinnacle Foods (NYSE: PF) fell as much as 12.3% early Wednesday, then settled to trade down 5.45% as of market close after the company announced the resignation of its CEO.
So what: Specifically, after nearly seven years at the helm, Pinnacle CEO Robert Gamgort will leave the company to assume the role of CEO at coffee specialist Keurig Green Mountain at the end of April. Until then, Gamgort will continue to serve as Pinnacle's CEO and on its board of directors.
Meanwhile, Pinnacle's board has already begun a search for Gamgort's replacement, including both internal and external candidates, and expects to conclude that search in time for a seamless transition when Gamgort departs.
Now what: "The decision to leave Pinnacle is a difficult one," explained Gamgort, " as I am very proud of the unique business model that we have developed and the significant value that we have created for all stakeholders. I am most proud, however, of the strong management team and Board of Directors that we have built, as they will continue to drive Pinnacle's future success."
In the end, it's evident the market isn't pleased by Gamgort's unexpected departure, especially considering he led the company through its 2013 initial public offering. But while high-quality leadership is indeed crucial to a company's ability to continue generating shareholder value, I tend to agree that, however surprising the move, Gamgort's departure will be one Pinnacle can easily absorb. As such, I think long-term Pinnacle Foods investors would be wise to ignore today's pullback as little more than a knee-jerk reaction by our short-term-oriented market.