Kraft Foods Group Inc. chief executive officer Tony Vernon is stepping down from the helm of the maker of Velveeta and Jell-O, with chairman John Cahill taking over the job.
Vernon will retire on Dec. 27, the last day of Kraft's fiscal year, the Northfield, Ill.-based company said Thursday in a statement. Vernon will remain an adviser through March and stay on as a board member until the next annual meeting in 2015. The move sent the shares up as much as 5.3 per cent, the biggest intraday jump in more a year.
Vernon, 58, shepherded Kraft through its first two years as an independent company, following its split with Mondelez International Inc. in October, 2012. While Kraft has a stable of household brands, it has struggled to maintain growth. Sales are projected to be little changed this year while profit shrinks 31 per cent, according to data compiled by Bloomberg.
"When you announce your retirement in 12 days, you were probably pushed out," said Brian Yarbrough, an analyst with Edward Jones & Co. in St. Louis. "As far as performance, they definitely haven't hit their targets."
Kraft climbed as high as $62.74 (U.S.) in New York, for the biggest gain since May 3, 2013. Before today, the stock had added 10 per cent this year, compared with an 8.9-per-cent gain for the Standard & Poor's 500 Index.
The 2012 split with Mondelez left Kraft Foods with a business focused almost entirely on North America, rather than faster-growing overseas markets. Younger consumers in the U.S. also have shown a preference for natural and organic ingredients and Kraft has struggled to respond. In addition, rising commodity prices have squeezed the company, Yarbrough said.
"Core centre-of-the-aisle brands are struggling," he said. "It's difficult unless you're natural or organic or you're protein-based."
Cahill, 57, joined Kraft in 2012 and became executive chairman when it was spun off from Mondelez. He previously served as chairman and CEO of Pepsi Bottling Group Inc. and spent nine years at PepsiCo Inc.
The company is looking to Cahill to fulfill its "potential as the industry leader," Mackey McDonald, the lead independent director on Kraft's board, said in the statement.
"The board and Tony agree that we need to accelerate the pace of change," he said.