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Juul names new CFO amid management shake-up, several top executives are out

KEY POINTS
  • Several top executives have left Juul amid a shake-up at the e-cigarette giant.
  • New CEO K.C. Crosthwaite is reviewing the company’s operations.
  • Juul will cut about 500 jobs by the year-end.
AP: Ditch Juul congressional hearing
A person in the audience wears a shirt against JUUL as JUUL Labs co-founder and Chief Product Officer James Monsees, foreground, testifies before a House Oversight and Government Reform subcommittee on Capitol Hill in Washington, Thursday, July 25, 2019, during a hearing on the youth nicotine epidemic.
Susan Walsh | AP

Juul CEO K.C. Crosthwaite has replaced the company’s chief financial officer amid a management shake-up at the embattled e-cigarette maker, according to people familiar with the matter.

Several top executives have left the company, including Chief Administrative Officer Ashley Gould and Chief Financial Officer Tim Danaher, two veteran employees at the young start-up. Newcomers Craig Brommers, chief marketing officer, and David Foster, senior vice president of advanced technologies, are also gone.

“We would not be where we are as a company today without the extraordinary efforts of a few individuals who have asked to transition out of the company. I want to make sure to specifically thank each of them,” Crosthwaite, a former Altria executive, said in an email sent to employees Monday.

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Juul appointed Guy Cartwright as its new CFO, a Juul spokesman confirmed to CNBC. Cartwright joined the company in July as transformation and operations officer, according to his LinkedIn profile.

“Over the past 3 months, Guy has been instrumental in helping us define our financial priorities and identify opportunities for efficiency,” a company spokesman said in a statement.

Juul has eliminated the chief marketing officer position, according to the spokesman. It was not immediately clear whether Juul would fill Gould’s and Foster’s positions. Co-founders James Monsees and Adam Bowen, who formerly held the positions of chief product officer and chief technology officer, respectively, will join a newly formed founders office, where they will advise Crosthwaite.

The changes were announced in the email sent to employees. They come as Juul prepares to cut about 500 jobs, or about 10% to 15% of its total head count, by the end of the year. Before the cuts, Juul boasted about 4,100 employees.

“As the vapor category undergoes a necessary reset, this reorganization will help JUUL Labs focus on reducing underage use, investing in scientific research, and creating new technologies while earning a license to operate in the U.S. and around the world,” Crosthwaite said in a separate statement addressing the layoffs Monday.

The shake-up comes just a month into Crosthwaite’s tenure. The longtime Altria executive succeeded former Juul CEO Kevin Burns, who steered the company through its deal with Altria. The tobacco giant invested $12.8 billion in Juul in December.

The deal sent Juul’s valuation soaring to $38 billion. It prompted intense criticism from public health advocates who said taking money from the top U.S. cigarette manufacturer undermines Juul’s stated mission to help eliminate smoking.

The situation has quickly worsened for Juul in the nearly year since announcing the deal. At least one hedge fund has reportedly slashed the value of its stake in Juul to a price that values the e-cigarette maker at $24 billion.

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The Trump administration has said it will remove all flavored e-cigarettes from the market amid a surge in teen use. Local and state governments are tightening restrictions and in some cases, banning e-cigarettes outright. Retailers like WalmartWalgreens and Kroger are pulling the products from shelves.

Juul is facing mounting litigation. The company is the subject of numerous investigations, including one from a House panel that Rep. Raja Krishnamoorthi, D-Ill., is leading. The committee grilled Gould, one of the executives being removed, about Juul’s youth outreach program that sent company representatives into schools.

Crosthwaite is tasked with turning Juul’s fortunes around. Under his leadership, the company has suspended all product advertising in the U.S. and stopped selling Juul’s sweet flavors like mango and fruit. Juul has also said it will not lobby the Trump administration on its looming flavor policy.

Crosthwaite poached former Altria colleague Joe Murillo to lead Juul’s regulatory efforts. Murillo will focus on preparing and filing Juul’s application with the Food and Drug Administration to keep selling its e-cigarettes. All companies will need to submit their products to the FDA for review by May 2020.

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