On Wednesday, vaping firm Juul announced it was replacing its chief executive, Kevin Burns, with KC Crosthwaite, formerly with tobacco giant Altria. The replacement follows reports of vaping-related lung diseases and growing concerns about the firm’s advertising towards children.
Hyunseob Kim, professor of finance in the Johnson Graduate School of Management at Cornell University and an expert in corporate governance says that a former tobacco executive is a natural pick given their expertise with regulators, one of Juul’s most important audiences in the foreseeable future.
“The announced replacement of the Juul CEO Kevin Burns with Crosthwaite, senior vice president and chief strategy and growth officer at tobacco giant Altria appears to be a natural reaction to a couple of recent developments at Juul: the increasing reports of vaping-related lung diseases and the resulting increased scrutiny from the regulators.
“Juul may have been considered a consumer product company led by two founders and Burns, former president of Chobani, a yogurt maker. However, the increasing need for the company to work with regulators, policy makers, as well as the general public - as many tobacco companies have been doing - likely led to Juul to appoint Crosthwaite, a tobacco industry veteran.
“Also, Altria appears to exercise their control of the company as the largest shareholder (with a 35% stake) of Juul.”