Groupon Board Is Said to Focus CEO Search on External Candidates

Groupon Inc.’s board plans to find someone from outside the company to replace Andrew Mason, who was ousted as chief executive officer of the daily deals website last week, two people with knowledge of the matter said.

Directors expect to hire an executive-recruiting firm in the next two weeks and aim to find a new CEO within three to six months, said the one of the people, who asked not to be named because the matter is private.

The new CEO will need to create a money-making business and restore credibility at the Chicago-based company, which lost $723.8 million in the past three years. Limiting the search to external candidates means Groupon is not currently considering insiders such as Chief Operating Officer Kal Raman, a veteran of Inc. and EBay Inc. mentioned by analysts as a top contender for the CEO job.

Eric Lefkofsky and Ted Leonsis, the board members leading the search and running the company during its transition, have been ruled out as candidates for the permanent CEO role along with other directors, said Paul Taaffe, a spokesman for Groupon. He declined to provide details on the executive search.

Groupon executives may be considered if suitable candidates cannot be found outside the company, the people said.

Raman was promoted to COO and given oversight of global sales and operations in November, after joining Groupon in April. Other Groupon managers with experience at large e-commerce companies include Chief Financial Officer Jason Child and Jeff Holden, a senior vice president of product management. Both previously worked at Seattle-based Amazon, the largest online retailer.

Challenging Search

Headhunters may struggle to find an executive willing to handle company oversight while taking orders from Lefkofsky, Groupon’s executive chairman, co-founder and largest shareholder, Adam Charlson, executive vice president of DHR International Inc., said in an interview last week.

“What CEO is going to want to take over with one of the co-founders involved in the company?” Charlson, whose firm does executive searches, said in an interview. “Anybody who takes the job is going to be looking for another job in six months.”

Groupon has no plans to change its business model after firing Mason, CFO Child said at a Deutsche Bank AG conference yesterday.

“We’ll be looking for the right long-term replacement,” Child said. “I would not expect there to be any sort of business-model changes or anything like that.”

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