Sat, Dec 01, 2012 - Page 15 News List

Groupon CEO stays on after directors discuss his tenure

Bloomberg

Groupon Inc, the largest provider of online coupons, has no immediate plans to replace chief executive officer Andrew Mason after its board met to deliberate whether to make changes to senior management.

Directors of the Chicago-based company met on Thursday with some members planning to voice frustration with Mason’s leadership, a person with knowledge of the matter said this week.

Groupon shares fell in late trading on Wall Street on Thursday after the disclosure that he would not be ousted.

“The board and the management team are focused on the performance of the company and they are all working together with heads down to achieve Groupon’s objectives,” Paul Taaffe, a spokesman for Groupon, said in an interview.

The board was faced with deliberating whether Mason — a 32-year-old college music major with little prior business experience — had matured into an effective manager, or become a hindrance to growth at the company that he helped create.

One option is for Groupon to take a cue from Google Inc, which flourished after co-founders Larry Page and Sergey Brin made way for a more seasoned executive in Eric Schmidt, said Erik Gordon, who teaches at the University of Michigan.

“It’s an oft-told, oft-expected story that the genius entrepreneur steps aside when he or she succeeds at building a company big enough to need an experienced CEO,” said Gordon, clinical assistant professor at the Stephen M. Ross School of Business. “The Google guys did it, and the results were spectacular.”

Questions about Mason’s role have accumulated since the company held an initial public offering. Growth has slowed and Groupon’s stock has plummeted as demand for daily deals dwindled.

Mason has struggled to shore up the core business and expand into new areas to generate additional sources of revenue.

Groupon shares fell as much as 5.9 percent to US$4.27 in extended trading on Thursday. They rose 2.7 percent to US$4.54 at the close in New York. The stock is down 78 percent so far this year.

Separately, LivingSocial Inc, the second-biggest provider of online daily deals, is cutting about 400 of its 4,500 employees, while it plans to increase spending on marketing and mobile.

The cuts, affecting mostly sales and customer-service positions in the US, were announced on Thursday, said Andrew Weinstein, a spokesman for the Washington-based company.

The moves resulted from an operational review in which management also approved 100 new hires and increased spending to target growth.

“We wanted to align our cost structure with the company’s plans for 2013,” Weinstein said in a telephone interview.

The company plans to hire staff in areas including mobile technology.

Eric Eichmann, president of the international business unit, is also leaving, Weinstein said.

Eichmann did not respond to a request for comment.

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