Expedia Group CEO Mark Okerstrom out amid board disagreement over strategy

Expedia Group CEO Mark Okerstrom and CFO Alan Pickerill have resigned effective immediately over strategic disagreements that “necessitated a change in management,” according to board chairman Barry Diller.

Diller and vice chairman Peter Kern will oversee operations while the board determines who should lead the company.

In announcing the resignations, Diller says: “Ultimately, senior management and the Board disagreed on strategy. Earlier this year, Expedia embarked on an ambitious reorganization plan with the goal of bringing our brands and technology together in a more efficient way. This reorganization, while sound in concept, resulted in a material loss of focus on our current operations, leading to disappointing third quarter results and a lackluster near-term outlook.

"The Board disagreed with that outlook, as well as the departing leadership's vision for growth, strongly believing the Company can accelerate growth in 2020. That divergence necessitated a change in management. Mark Okerstrom is a talented executive and his 13 years of service to Expedia has greatly benefited the enterprise. The Board and I wish him the best for the future, as we do for Alan Pickerill."

Okerstrom's predecessor, Dara Khosrowshahi, has maintained a seat on the Expedia Group board of directors since he left to run Uber in the summer of 2017.

In November this year, Expedia Group posted disappointing third quarter 2019 results, with net income down 22% year-over-year and adjusted EBITDA flat, blamed primarily on the use of high-cost marketing channels as Google’s actions continue to weaken SEO efficiency. 

The company’s stock plunged more than 27% the day after the earnings release, its worst single-day performance on record.

Less than a month ago, at Expedia Group's customer event in Las Vegas, Okerstrom referenced the company's strategic goal was to banish friction for customers and remove "silos" across the business. 

This was also referenced in a letter sent by Diller to employees today, announcing Okerstrom and Pickerill's departures.

He writes: "The work Mark began, to break down silos and focus on the whole company, is keenly important to our future. We expect all of you, regardless of where you reside in the company or how your role might have recently changed, to look to make the whole better – to simplify processes, to improve collaboration, and to set all of us up for success."

In a show of confidence in the company’s future, Diller says he is “purchasing additional shares in the Company as a tangible sign of my faith in and commitment to Expedia's long-term future.

Vice chairman Kern says: “While we share and understand the investment community's unhappiness with our third quarter results and how 2019 has shaped up overall, we are keenly focused on the future and all of the opportunities ahead of us. We believe there is significant opportunity for Expedia to grow revenue and margins in what is a still a very dynamic online travel industry. The Company has an exceptionally strong and deep executive leadership team in place.

"Barry and I, as well as the entire Board, look forward to working closely with them in the period ahead, as well as over the long-term. Additionally, we intend to use our strong balance sheet to continue and amplify our stock repurchase program, given our belief that the market currently undervalues our company."

Expedia Group is authorizing a new share repurchase for up to an additional 20 million shares of the company's common stock, which is in addition to the nine million shares available under the company's existing authorization. The company now has approximately 29 million shares available under its repurchase program.

As part of the reorganization, Eric Hart, the company's chief strategy officer, will serve as acting CFO. In an email to employees, Diller also says the company will create a new Expedia Business Services organization comprising Expedia Partner Solutions and Egencia and to be led by Ariane Gorin, who most recently served as president of Expedia Partner Solutions.

In mid-November Okerstrom spoke at The Phocuswright Conference in Florida and then sat down for an interview in the PhocusWire studio. Both videos are below.