ST. LOUIS - Panera Bread Co. executives used inside information to dump stocks for $11 million at inflated prices while withholding negative financial information from shareholders, according to a class-action complaint in Federal Court. Plaintiffs claim Panera CEO Ronald Shaich and CFOs Mark Hood and Jeffrey Kip led the scam.
Panera used "system-wide sales" as a key financial metric, which uses the sales at all company-owned stores for store development and budget analysis, the suit states.
Plaintiffs claim Panera used its systemwide sales as it continuously increased its earnings guidance. Meanwhile, Panera was rapidly opening stores across the country and unknown to shareholders, the aggressive growth strategy was causing the company to suffer declining sales at existing stores - a trend not reflected in the systemwide sales.
Before disclosing the negative information, Shaich, Hood, Kip and other Panera insiders sold 172,475 shares of their stock for more than $11 million, the suit states.
Panera owns and franchises 1,097 stores. The class consists of shareholders who owned Panera stock between Nov. 1, 2005 and July 26, 2006. Plaintiffs are represented by Don Lolli of Kansas City. See complaint.
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