Seventh Generation sweeps out its founder
Here’s some shocking news: Jeffrey Hollender, the pioneering co-founder and longtime CEO of Seventh Generation, has been forced out of the company.
Details on what happened and why are scant—I hope to tell you more, before long—but Jeff has told friends that his ouster came as a surprise. It evidently followed months of tension with his board and with Chuck Maniscalco, the former senior exec at PepsiCo who was brought on as CEO of Seventh Generation in June 2009.
Maniscalco resigned as CEO in September, but he is now once again a candidate for the position, according to a letter to company shareholders and employees from Peter Graham, the company’s board chairman. The letter — dated October 26 — said that the board has “reluctantly voted” to put Hollender on leave of absence from the company and remove him from the board.
The board action “came as a surprise to me,” Jeff said in an email to friends. “My sincere hope and intent was to have resolved these issues with the company.” I’ve pasted the texts of Jeff’s email and the company’s announcement below.
I emailed Jeff today, requesting an interview.
“Not much I can say,” he wrote back.
Seventh Generation, as most of you know, is a leader in the “green” household products arena. It makes green cleaners, laundry detergent, dishwashing soap, diapers, baby wipes, tampons, recycled toilet paper, tissues, and paper towels. As a private company, Seventh Generation doesn’t report sales or earnings but in a June 2009 blogpost, Jeff said the company had sales of about $150 million. The board hired Maniscalco to drive sales to $1 billion.
But Jeff’s impact has gone far beyond the walls of Seventh Generation, which is based in Burlington, Vt. He’s co-author of an excellent book, What Matters Most, about the corporate responsibility movement. He speaks frequently about business and sustainability, and has been politically active on behalf of climate change, among other issues. His Inspired Protagonist blog is a model of corporate transparency.
Speaking of transparency…. there’s not a word (as of Monday Nov. 1) on the Seventh Generation website about his departure.
Interestingly, Graham, the board chairman, is a childhood friend of Jeff’s. They attended Riverdale Country Day School together and several years ago traveled to India. It’s not clear whether Graham backed Jeff in the power struggle at Seventh Generation, or turned against him. Obviously there’s more to this story than we know.
In the meantime, here’s an email that Jeff sent to friends and shared with me:
More than two decades ago, I founded Seventh Generation with the idea of creating a different way of doing business. Since then, the company has established new benchmarks for ethical and sustainable corporate behavior, grounded in the principles of employee ownership, pay equity, environmental responsibility and transparency. At the same time, Seventh Generation is a recognized pioneer in its category and a successful business enterprise.
On Monday, October 25th, the Seventh Generation Board announced to it’s shareholders and employees that they have “decided to end the company’s employment relationship” with me “. . .without cause”. Though I cannot discuss the circumstances that led to this, I wanted you to hear this news directly from me. [I have also attached the letter that was sent out by the Company.]
Over the past twenty years, I have had the privilege to work with an extraordinary group of committed, talented people — and I thank them all and wish them the best. I plan to remain fully engaged in the work of creating a new paradigm for justice, equity and corporate responsibility through my new book, Planet Home that will be published by Random House in January 2011; my work on the boards of Greenpeace and Veritee; and in my role as the co-founder of the American Sustainable Business Council.
I greatly appreciate your support and friendship over the years.
And here is Graham’s letter to shareholders and employees:
October 26, 2010
Dear Friends and Shareholders of Seventh Generation,
In the life of every company, there comes a time when the most difficult of decisions must be made. These moments are rarely deliberately sought but instead thrust upon us by unexpected circumstance and by events, which demand that hard choices be made.
Recently, the Board of Directors of Seventh Generation faced such a decision and was forced to act in what we firmly believe to be the best interests of both our company and you, its shareholders. First, I want to offer you some context. In mid September, Chuck Maniscalco, our CEO since June 2009, resigned after a very difficult period. Following lengthy discussion the Board convinced Chuck to stay to lead the company at least through a transition while the Board immediately commenced a search for a new CEO. Chuck is personally committed to and focused on leading our company through this transition period, and is considering applying for the job of leading Seventh Generation as part of our search process. We are all committed to having the best leadership we can for our company.
With that as background, I want to share with you that, following our September meeting, the Board of Directors reluctantly voted to put Seventh Generation co-founder Jeffrey Hollender on a leave of absence from the company and to remove him from the Board pending further discussions about his future role. Since that time, and after further deliberation, the Board has decided to end the company’s employment relationship with Jeffrey. Importantly, when Jeffrey stepped down as CEO, he negotiated an agreement with the company that allowed for the termination of his employment and provides him with generous severance and other benefits were his employment to end. We have honored that agreement to date, and we intend to honor that agreement going forward. And, I want to assure you that the board, in making these decisions, did so with the best interests of the company, as well as fairness to Jeffrey in mind.
All of this was difficult, and I must emphasize that these decisions were not taken lightly. As the leader of the company since its very earliest days and its philosophical guiding light for over two decades, Jeffrey has been an integral part of our brand and an obvious lynch pin of our success, our unique corporate spirit, and our much acclaimed emphasis on equity and justice in the way we conduct our business. It is no overstatement to say that without his unwavering dedication to our cause and his tireless efforts on our company’s behalf, we would not be the company we are today, and indeed might not be here at all. His is a legacy worthy of the highest respect and admiration, and nothing in our recent decision should dim that in any way.
Nevertheless, recent events have forced us to choose between divergent paths. We have elected to set the company on the one we strongly feel has the very best chance of fulfilling the commitment we’ve made to all our stakeholders to achieve the greatest possible lasting success, financially but especially in terms of making our world a better, safer place for our children and the following seven generations.
To a large extent, present circumstances mirror those at many other companies whose founders have made the decision to turn over the reins to someone else. As organizations grow, so do their managerial requirements. Eventually these increasing layers of complexity demand the recruitment of experienced professional leadership whose abilities and experiences are required to move forward. This is the crossroads at which Seventh Generation now stands.
And that is an important point that must be made: Though our leadership has changed, our aspirations have not. It remains our objective to continue to grow Seventh Generation while staying true to the strategies we’ve previously shared with you over the years. We believe deeply in our business and its model, and will continue to do all that is within our power to drive our business, our social mission, and our global imperatives forward.
Despite this period of executive transition, the Board remains confident in the company’s ability to continue to grow its business and social mission for long-term success. Our accomplishments over the past year are numerous, and each reflects the company’s ongoing commitment to corporate responsibility and to growth. These important milestones include:
–Achieving three consecutive quarters of growth despite an extraordinarily challenging economic and competitive landscape. Year-to-date, our sales have grown at a double-digit pace, which would be the envy of many of our competitors during this extraordinarily challenging economic landscape.
–Successfully introducing the first ever EPA-registered botanical disinfectant cleaner.
–Launching our first-ever national advertising campaign, which more than doubled awareness of toxic cleaning product issues as well as our brand itself.
–Expanding our already extensive distribution base to include Safeway and also Wal-Mart, a partnership that accelerated our commitment to make green products affordably accessible to more consumers.
–Increasing our involvement with Women’s Action to Gain Economic Security (WAGES) in order to more effectively address our economic equity concerns.
–Marshalling public support for reform of the badly outdated Toxic Substances Control Act.
–Engineering the first cleaning product packaging made from 90% post-consumer recycled content.
–Successfully completing a $30 million equity capital raise with a group of investors aligned with existing shareholders as responsible, long-term stewards of the Seventh Generation brand.
Change is always difficult, and this particular evolutionary moment has certainly been more challenging than most. What matters, however, is not what has happened but what will happen. On this count, the Board is confident that it has taken the steps necessary to ensure that Seventh Generation’s untapped growth potential is fully realized in the years ahead. As we move into that promising future, we continue to express our thanks for everything Jeffrey has done for us and for the company he has built. That company has a rewarding road ahead of it indeed, but this success cannot and does not depend on any one individual. Instead it springs from the unique synergy that comes when many act together to realize a singular ideal. That’s the task before us now, and with your continued help and support, I’m certain we’ll achieve it.
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