Warren Buffett has fired the CEO of paint company Benjamin Moore after just fifteen months on the job. Buffett announced that Bob Merritt, who has worked with Buffett for years and turned around Outback Steakhouse, had been let go during a conference call last Friday, reports James Covert for The New York Post.
Merritt took over for Denis Abrams last year after mounting complaints from local dealers about how they were being treated. Abrams forced them to accept exclusive contracts and, according to the dealers, squeezed money from them wherever he could and charged for marketing services without actually providing them. With a boss who has literally made his name by looking at long-term value, it’s no surprise that he was fired for short-sighted profit grabbing.
But no reason was given for getting rid of Merritt. Even though most of his prior experience had been in the restaurant sector, it appeared that Merritt had been doing a good job rebuilding relationships with local dealers and solving problems left behind by his predecessor, so his firing came as a surprise. According to the announcement, the search for a new CEO is already underway and a replacement will be announced in the next few weeks.
Buffett bought Benjamin Moore for 1B
Berkshire Hathaway bought Benjamin Moore in 2000 for about $1 billion as part of a larger move into housing related industries, Zachary Tracer for Bloomberg reports. Berkshire Hathaway stock has fallen slightly on the news, and whatever the reason for the quick change up it is an embarrassment for the company. Buffett is normally a hands-off executive with a talent for finding undervalued companies and talented management teams to bring out that value. Looking for the third CEO in two years points to deeper problems at Benjamin Moore that may be difficult to fix.
Stock of Benjamin Moore
Of course, Benjamin Moore is just one company held by Berkshire Hathaway, and the company’s stock is still doing quite well, up more than 20 percent so far this year, and only slightly off its five-year high. The temporary downturn will probably right itself as soon as Buffett announces a successor that Wall Street has confidence in.