Steve Davis is stepping down as chief executive of Bob Evans Farms Inc., just months after the activist investor Sandell Asset Management won four seats in a proxy fight against the New Albany, Ohio-based company.
His resignation is effective immediately, the company said, though Davis will remain with the company through the end of the year to help with the transition.
Mark Hood, Bob Evans’ chief financial officer, and Mike Townsley, president of Bob Evans Foods, will share interim CEO duties in a newly established interim Office of the Chief Executive. Hood and Townsley will oversee day-to-day operations of the company during a search for a new CEO. Hood and Townsley will remain in their current positions.
“The independent directors unanimously concluded that as the company strives to improve performance, it would benefit from new leadership and enhanced execution,” said Mary Kay Haben, non-executive chair of Bob Evans, in a statement released late Sunday night.
“We thank Steve for his tireless efforts, dedication and many significant achievements as CEO of Bob Evans for over eight years and we wish him the best in his future endeavors.”
The board has formed a transition committee including Haben, Doug Benham and Larry McWilliams. Haben is a former Wrigley executive, Benham, a consultant, is former CEO of Arby’s, and McWilliams is the co-CEO of Compass Marketing. Both Benham and McWilliams were added to the board this year.
Prior to joining Bob Evans, Davis was president of Long John Silver’s and A&W All-American Food Restaurants. He has overseen rapid growth of Bob Evans Foods, its packaged foods business, in a bet on consumers eating more food at home.
However, the company struggled with Mimi’s Café, bought for $182 million two years before Davis arrived and sold to LeDuff America for $50 million in 2013. Sales at Mimi’s fell $127 million between 2010 and 2013, according to Securities and Exchange Commission filings.
Sales at its flagship, 562-unit restaurant chain, Bob Evans, have lagged recently — they were flat in the company’s most recent quarter, while each of its competitors in the family dining business grew.
“Over the last eight years, we have transformed Bob Evans Restaurants and the Bob Evans Foods business unit, created a great leadership team and brought our business and community involvement to the next level,” Davis said in a statement. “I am proud of the legacy we have built and am confident the team will continue to build on our sales and profit growth.”
Late last year, Sandell Asset Management bought up stock in the chain and pushed for major changes at the company, including a sale of real estate and a spinoff of Bob Evans Foods. Sandell ultimately nominated eight members to the 12-person board of directors in a bid for control of the chain.
Davis survived that proxy, and only four of Sandell’s eight nominees were elected to the board as shareholders. But shareholders also voted in the three new members that Bob Evans appointed earlier in the year, meaning that seven of the 12 members of the board were added this year.
With that many new members, changes were expected. Earlier this month, Bob Evans said it hired advisory firms to analyze the company’s overall strategy and cost structure. Davis called it a “comprehensive review.”
Stephen Anderson, analyst at Miller Tabak + Co., LLC said that Sandell has achieved “a significant objective in its removal of Davis.”
Anderson said that a new CEO could reduce sales, general and administrative (SG&A) spending more aggressively. with a new CEO in place the company could make a decision on spinning off the food manufacturing division “sooner rather than later.”