Some Groupon Inc. (GRPN:US) directors plan to discuss a possible leadership change amid concern that Chief Executive Officer Andrew Mason is mishandling the company’s turnaround, a person familiar with the matter said.
Mason’s role as CEO will be considered in a regularly scheduled board meeting tomorrow, said the person, who asked not to be named because the issue is private. Mason responded to reports on the planned discussions by saying he’d fire himself if he weren’t suited to the task.
“It would be weird if the board wasn’t discussing whether I’m the right guy to do the job, and it’s their chief responsibility to ask that question,” Mason said today at a conference in New York organized by Business Insider.
The shares have dropped 80 percent (GRPN:US) since Groupon’s November 2011 initial public offering amid ebbing demand for online coupons. Mason, who co-founded Groupon in 2008, has struggled to shore up the core business or push the company into new areas to generate added sources of revenue. Directors will voice frustration that he has failed to do more to reverse the slide, the person said.
“He’s young, he’s inexperienced, he’s running a company which spans multiple countries all around the world, and he has no previous operating experience,” said Sameet Sinha, an analyst at B. Riley & Co. in San Francisco. A new CEO “with some gray hair could bring on some strong operational experience.”
Tomorrow’s meeting may not result in leadership changes, the person said. Groupon shares rose 5.6 percent to $4.18 at 2:23 p.m. in New York.
Paul Taaffe, a spokesman for Chicago-based Groupon, declined to comment yesterday, and representatives of Groupon’s board either declined to comment or didn’t respond to requests for comment.
While the shares remain under pressure, they have pared part of their descent since Nov. 19, when Tiger Global Management LLC said it acquired a 9.9 percent stake in the coupon website. The backing of Tiger Global, a New York hedge fund, is one of the first encouraging signs for the company amid a tumultuous year, said Edward Woo, analyst at Ascendiant Capital Markets LLC in Irvine, California.
The company makes money by selling discounts -- known as Groupons -- from businesses such as restaurants and nail salons. It then splits the revenue with the businesses. It has also sought to diversify its income by introducing Groupon Goods, an e-commerce site for marked-down products.
Groupon also took steps to bolster its international sales, which fell during the most recent quarter, including promoting e-commerce veteran Kal Raman to chief operating officer earlier this month.
The company appointed two new directors -- Daniel Henry, the finance chief of American Express Co. (AXP:US), and Robert Bass, a vice chairman of Deloitte LLP -- earlier this year. They join a board that includes Mason, Executive Chairman Eric Lefkofsky, venture capitalist Peter Barris, and Mellody Hobson, president of Ariel Investments LLC.
Mason should be given more time to address weakness in the business, especially in markets outside the U.S. where he has said he plans to focus, said Tom Forte, an analyst at New York- based Telsey Advisory Group.
“I would give him another year to see if he could get the international operations on track,” Forte said in an interview. “Mason can still be an effective CEO for Groupon and I would be surprised if the company replaced him at this juncture.”
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