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
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.
Executive Interview: Expedia - The Phocuswright Conference 2019
Expedia's Mark Okerstrom on SEO, capital and diversity (PhocusWire @ Phocuswright Conference 2019)