Bob Evans CEO Steve Davis stepping down
Steven Davis’ eight-year ride as Bob Evans Farms’ chief executive came to an abrupt end yesterday.
Davis was removed as CEO by the board of directors as the company continues to battle one of its largest shareholders over how to improve results that have been lagging in recent years.
“The independent directors unanimously concluded that as the company strives to improve performance, it would benefit from new leadership and enhanced execution,” said board chairwoman Mary Kay Haben.
The board had voted Davis out as chairman in October, replacing him with Haben.
Davis also is resigning from his seat on the board.
He is the second high-profile CEO in central Ohio to leave his job this month. Abercrombie & Fitch’s longtime CEO, Michael Jeffries, retired abruptly a week ago.
Davis, 56, took over at Bob Evans in 2006 as the second non-Evans family member to run the company. He weathered the Great Recession and invested heavily in remodeling restaurants and expanding the company’s prepared-foods division.
Bob Evans fell into decline, though, and has struggled for more than a year to turn around same-store sales, a key restaurant performance metric.
“He was being kept on a very short leash by the board,” said Stephen Anderson, an analyst with Miller Tabak + Co. “At the end of the day, I am not surprised.”
Bob Evans’ stock jumped 6 percent yesterday morning after the announcement, but it fell back as the day progressed. The stock closed with a gain of less than 1 percent.
Davis was terminated without cause, said Scott Taggart, vice president of investor relations. Davis could collect $1.6 million in severance pay, or two years of base salary, according to his employment contract. Total severance is being determined by the company, Taggart said.
Davis, who will stay on through the end of the year to assist the company with the transition, remains one of Bob Evans’ largest individual stockholders; he has more than 482,000 shares.
Two current executives will head the company in the interim: Mark Hood, the chief financial officer, and Mike Townsley, president of Bob Evans Foods. Hood was hired this year. A search for Davis’ replacement will begin immediately.
Davis is leaving after a yearlong battle with activist investor Thomas Sandell, whose campaign won four seats on the board of directors. It was not a sweeping victory for Sandell — Bob Evans has 12 directors — but analysts thought at the time that it signaled the coming end of Davis’ regime.
“He’s been thought of as part of the problem,” said John Gordon, principal of Pacific Management Consulting Group.
Davis’ departure is the right move, Sandell said in a statement.
“We are pleased the board has agreed with our view that a management change was needed at the company, and has acted decisively on this belief,” Sandell said.
Anderson said yesterday that Davis led aggressive cost cutting throughout Bob Evans’ operations but failed to cut the fat at its corporate headquarters. The company announced this month that it had hired consultants to wring efficiencies from its headquarters staff, a move that often comes with job cuts.
Sandell pushed several strategic initiatives during the proxy battle with Davis, including a sale and lease-back of the company’s real estate and a sale of Bob Evans Foods.
“I think this makes it more likely that we will see a split-up of the company,” Anderson said.
Davis went to Bob Evans after leading the Long John Silver’s and A&W division of Yum Brands Inc. He also held executive roles at Kraft Foods and Pizza Hut.
Davis presided over the controversial move of Bob Evans’ headquarters from the South Side to New Albany in 2011 and the sale of Mimi’s Cafe in 2013. Bob Evans bought Mimi’s in 2004 for $182 million but sold the chain for $50 million.
Anderson believes the board of directors has candidates for the CEO post. He pointed to two board members who were touted by Sandell: Doug Benham, the former CEO of Arby’s, and David Head, president of Primanti Bros. and the former CEO of O’Charley’s.