Green Mountain Coffee: The Perils of Stock Collateral

When your entire net worth hinges on your company’s volatile stock price—and you’ve borrowed heavily against it—the market doesn’t just punish your shares. It can take your yacht, your mansion, and eventually, your job. That’s what happened to Robert Stiller, the founder of Green Mountain Coffee Roasters, once a $90 million Vermont startup that rode the single-serve coffee boom to dizzying heights.

The short answer? Stiller pledged nearly all his Green Mountain shares as collateral, then watched the stock plunge from $97 to $26—forcing him to sell 5 million shares (3.2% of the company) to meet margin calls, and ultimately cost him the chairman role.

The Rise and Fall of Green Mountain’s Founder

In 2001, Robert Stiller had led Green Mountain Coffee Roasters for 20 years from its Vermont roots. At the time, the company was worth just $89 million. Stiller, described as soft-spoken and slightly overweight, had stepped back from daily operations, preferring practices like 45-minute daily meditation and “appreciative inquiry”—a management technique focused on learning from successes rather than failures.

But his relaxed approach to financial risk would prove disastrous. Over a decade later, he faced losing everything after reportedly using his Green Mountain shares as collateral for loans to fund an increasingly lavish lifestyle. He claimed he had mortgaged the stock even before the price surged, due to insider trading lockup periods that prevented him from selling shares.

How Stock Collateral Turned Into a Crisis

Mortgaging appreciating stocks isn’t inherently risky—until the value starts falling. When Green Mountain’s stock price collapsed, the situation deteriorated rapidly. Earlier this year, Stiller was forced to sell 5 million shares (about 3.2% of the company’s outstanding stock) to cover margin calls, leading to his removal as chairman. A significant portion of his remaining Green Mountain shares remained pledged as collateral. He has since expressed interest in reclaiming the chairman position.

For entrepreneurs whose wealth is tied up in a single publicly traded stock, Stiller’s story is a cautionary tale. In 2011, Stiller’s net worth soared after Green Mountain’s stock price tripled in 12 months to $97, making him a billionaire with nearly 90% of his wealth in the company’s stock, plus 5% in Krispy Kreme shares (which he had recently invested in). Both stocks have since plummeted. (He was also forced to sell those Krispy Kreme shares this week.)

Other High-Risk Stock Pledgers

Stiller wasn’t the first to use company shares as loan collateral, but few have pledged as much. Other examples include real estate developer Steven Roth, Campbell Soup heir Bennett Dorrance, Ameritrade’s Joe Ricketts, and even Tesla CEO Elon Musk, who has pledged a smaller portion of his holdings. Among the world’s billionaires, 269 individuals (including 43 Americans) held at least 80% of their wealth in a single public company’s stock, as per Forbes’ 2012 global billionaire list. Notable names include Lululemon founder Chip Wilson (whose stock trades at a 58 P/E ratio) and Ubiquiti Networks founder Robert Pera, whose company’s shares dropped 30% since peaking in April. Facebook co-founders Mark Zuckerberg and Dustin Moskovitz are expected to join this group soon.

Where Stiller Spent the Borrowed Millions

So where did the borrowed money go? Stiller amassed an array of luxury assets, including:

• A $10 million, 164-foot (50-meter) yacht named “Grace E” (formerly “Andale”), which he renovated with new furnishings, WiFi, smart video systems, a closed upper-deck gym, and space for 14 guests and 11 crew. Weekly rental rates for similar yachts reach $250,000.
• A $1.75 million Manhattan apartment purchased from New England Patriots quarterback Tom Brady, located in the Mandarin Oriental Hotel on the Upper West Side.
• A $1 million five-bedroom, six-bathroom home in Palm Beach, where he now resides.
• Two adjacent lakefront lots in Palm Beach’s Via Vizcaya area, bought for $390,000 and $475,000 respectively—nearly $600,000 less than what the previous owner paid five years prior.
• A small private jet leasing company, Heritage Flight, acquired in 2004 with borrowed funds. Based in Burlington, Vermont, the firm operates 10 aircraft and provides maintenance, avionics, FBO services, rentals, and aircraft management. Stiller admitted the investment may not have been worthwhile.
• A 5% stake in Krispy Kreme disclosed in January 2011, later increased to 11% by summer, making him the doughnut chain’s largest individual shareholder.

These “toys,” as described, turned out to be luxuries he could no longer afford. The “Grace E” yacht is reportedly soon to be listed for sale.

Frequently Asked Questions

What was Robert Stiller’s main mistake with his company stock?

Stiller used nearly all of his Green Mountain Coffee Roasters shares as collateral for personal loans. When the stock price fell from $97 to $26, he couldn’t cover the margin calls and was forced to sell 5 million shares (3.2% of the company), leading to his removal as chairman.

How much of his wealth was tied to Green Mountain stock?

Nearly 90% of Stiller’s personal wealth in 2011 came from Green Mountain Coffee Roasters stock, with an additional 5% from Krispy Kreme shares.

What luxury items did Stiller buy with the borrowed money?

He purchased a $10 million yacht, a $1.75 million Manhattan apartment from Tom Brady, a $1 million Palm Beach home, and two Palm Beach land plots. He also acquired a small private jet company and became Krispy Kreme’s largest individual shareholder.

Did Stiller lose his position at Green Mountain?

Yes, after being forced to sell shares to cover margin calls, Stiller was removed as chairman of Green Mountain Coffee Roasters.

Are there other entrepreneurs who have similarly pledged large amounts of company stock?

Yes, others include Tesla’s Elon Musk, real estate developer Steven Roth, and Ubiquiti Networks’ Robert Pera. Many billionaires hold over 80% of their wealth in a single public company’s stock.

What happened to Green Mountain Coffee Roasters’ stock price?

The stock peaked at $97 in 2011 but fell to $26, a major factor in Stiller’s financial collapse.

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