SAN FRANCISCO (MarketWatch) — The chairman and founder of Green Mountain Coffee Roasters Inc., Robert Stiller, was stripped of his title Tuesday after one of his stock sales ran afoul of the company’s internal-trading policies.

Another board member, William Davis, also was asked to relinquish his position as lead director over his own stock sales.

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Like Stiller, Davis sold Green Mountain GMCR shares when the company’s trading window for executives was shut, the company said in a statement. Both will remain on the board but not be paid “until the board determines otherwise,” according to Green Mountain.

The two were hit by margin calls due to a steep drop in Green Mountain’s share price. On May 2, the company cut its 2012 financial outlook due to slower sales of its K-Cups and Keurig single-cup coffee brewers.

Stiller and Davis were forced to sell shares to cover margin loans from their brokers — loans that had been backed by Green Mountain shares.

Green Mountain Coffee

On Monday, Stiller sold 5 million shares worth roughly $123 million. Davis unloaded 548,000 shares in separate dealings last Friday and Monday.

“These forced sales are disappointing and beyond the control of the company,” Green Mountain said in a statement. “Once the board was notified of this trading activity, it moved quickly to investigate and address this matter. The board determined that it was in the best interest of the company and its shareholders for Mr. Stiller and Mr. Davis to relinquish their leadership positions on the board as well as their committee roles.”

Green Mountain shares closed up almost 9% to $26.38 Tuesday. The stock once traded as high as $115.98 last summer.

Stiller, who founded Waterbury, Vt.-based Green Mountain in 1981 and served as its chief executive until May 2007, has long been an active seller of Green Mountain shares.

Lately, he’s stepped up his activity. In February, Stiller sold 1 million shares, netting more than $66 million in gross proceeds. Looking back, those sales look well timed.

They came before Green Mountain warned shareholders that its business was slowing and just weeks before Starbucks Corp. SBUX, -1.47% said it planned to sell its own single-cup coffee brewer.

Analysts at InsiderScore.com suggested Tuesday that Stiller also might face margin calls for the stock he owns in Krispy Kreme Doughnuts KKD.

In Tuesday’s trading, Krispy Kreme shares dropped 9% at $6.35 on eight times the normal trading volume.

Davis was elected to Green Mountain’s board in 1993; his current term is slated to expire in 2015. Davis also is the vice chairman of the board at the Learning Care Group, an early-education provider.