Groupon Inc. (GRPN) said Daniel Henry, the finance chief of American Express Co. (AXP), and Robert Bass, a vice chairman of Deloitte LLP, will become directors, underscoring efforts to shore up investors’ confidence in its accounting.
Henry was appointed on April 26 to replace Starbucks Corp. (SBUX) Chief Executive Officer Howard Schultz, who is departing. Bass will stand for election at the June 19 shareholder meeting. He will replace Kevin Efrusy, a partner at venture-capital firm Accel Partners, who won’t stand for re-election. The new directors will serve on the audit committee, Groupon said yesterday.
Groupon, the largest daily coupon site, is taking steps to improve financial governance after reporting a “material weakness” in financial controls and lower fourth-quarter revenue than previously stated. The stock has dropped 42 percent since the March 30 announcement, and Groupon officers, directors and underwriters were named in a lawsuit filed last month by investor Fan Zhang in Chicago federal court.
“It’s a good thing to enhance the financial oversight, given that we just had a very quick restatement,” said Clayton Moran, an analyst at Benchmark Co. in Delray Beach, Florida, who rates the stock a buy and doesn’t own it. “You bring in two guys who appear to be experts in public-company financial accounting; that, you would think, is an upgrade. So, I think it’s a step in the right direction.”
The company had been seeking to hire at least two new directors after the restatement of revenue, two people with knowledge of the matter said last week.
“The change in board members is not about something being broken,” said Mellody Hobson, a Groupon board member and president of Ariel Investments LLC, in an interview with Willow Bay on Bloomberg Television. “The change in board members there is about a shift in opportunity both for those who are there and those who are coming in.”
Groupon, based in Chicago, rose 1.5 percent to $10.87 at the close in in New York, after an 11 percent decline yesterday. Part of the decrease came after Schultz’s plans were made public. The February 2011 appointment of Schultz, who is credited with reviving the Starbucks brand, was viewed as a positive for a company that lacked a proven business model. Groupon stock has lost 47 percent this year.
“Howard Schultz is obviously a big-name guy and well respected,” said Herman Leung, an analyst at Susquehanna International Group in San Francisco.
Henry has been CFO of American Express since October 2007 and joined the company as comptroller in 1990. He previously was a partner at Ernst & Young. Bass, who has been a partner with Deloitte since 1982, has been a vice chairman of the firm since 2006. Bass is set to retire from Deloitte in June.
Schultz remains on the board of frozen-yogurt company Pinkberry and Maveron LLC, a venture capital firm, according to data compiled by Bloomberg. Efrusy’s Accel was an investor in Groupon before it went public last year. He remains on the board of BranchOut Inc., a social service for professionals.
In a regulatory filing, Groupon also revealed compensation for company executives last year. Groupon said Chief Executive Officer Andrew Mason had a compensation package of $7,943 in 2011, down from $184,599 in 2010. Mason is one of Groupon’s largest shareholders, owning about 7 percent of the company, according to data compiled by Bloomberg.
Mary Margaret Georgiadis, who left as president and chief operating officer last year, had $27.3 million in compensation. Jeffrey Holden, senior vice president of product management, received $13.6 million in compensation in 2011.
To contact the editor responsible for this story: Tom Giles at email@example.com