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Struggling Groupon ousts CEO Andrew Mason
Question of the Day
Mason’s ouster has been “fairly widely expected” given the company’s performance, said Gartner analyst Michael Gartenberg. He was more surprised by the fact that “it took them this long.”
“The question is whether this as a business model can last,” Gartenberg said. “It’s easy to replicate and under a lot of pressure. The question is where the company goes from here…. Clearly something wasn’t working, isn’t working.”
The company did not disclose details about any severance package he might have received, though it will be required to do so by next week. In a regulatory filing last year, Groupon said Mason is potentially entitled to $4,344.36 in total compensation if he is fired “without cause or for good reason.” The bulk of that amount is for health coverage, as Mason voluntarily reduced his base salary to $756.72 in 2011, from $180,000.
Benchmark Capital analyst Daniel Kurnos said that with Mason’s ouster, the board made the decision to try to “get the ship moving in the right direction.”
“There was always a sense that Groupon had a lot of good ideas but no real focus,” he said.
Can a new CEO answer all of Groupon’s problems? Kurnos doesn’t believe so. But he said a new CEO could perhaps get Groupon more focused and steer it toward more traditional businesses. For example, Groupon Goods, which sells products rather than restaurant or spa deals, has been performing well. With its deals, Groupon’s challenge is to balance pleasing merchants who sell the deals with pleasing the customers who buy them, he added.
“A lot of people want to say that the daily deals business is a zero,” he said. “I don’t think that’s true.”
In a statement, Groupon’s Leonsis said that the company “will continue to invest in growth, and we are confident that with our deep management team and market-leading position, the company is well positioned for the future.”
Gartenberg called the way the announcement came out “refreshingly honest.”
“There was no pretense that he is leaving to pursue other interests or spending more time with his family,” he said.
Groupon’s stock hasn’t traded above $10 since last July and hit its lowest point, $2.60, in November. Until Wednesday’s earnings report, the stock had been crawling back up, but the results disappointed investors who sent it tumbling once again.
After the announcement of Mason’s ouster, the stock gained 19 cents to $4.72 in after-hours trading. The modest 4.2 percent gain, compared with the 24 percent drop earlier in the day, is a sign that investors will need more than the CEO’s firing to start believing in Groupon again.
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