Groupon Inc. is bringing on two new directors to replace Starbucks Chief Executive Howard Schultz and venture capitalist Kevin Efrusy on the board, the company said Monday.
The two, who will serve on the Audit Committee, are American Express Co. Chief Financial Officer Daniel Henry and Robert Bass, a retiring vice chairman at consulting firm Deloitte LLP. Henry was appointed April 26 to replace Schultz, who stepped down. Bass is retiring from Deloitte June 2 and will stand for election at Groupon’s annual meeting that month to replace Efrusy of Accel Partners. Efrusy is not standing for re-election.
In a statement, Groupon Chairman Eric Lefkofsky said Henry and Bass bring “deep financial, accounting and operational experience” to the board. The changes leave the total number of directors at eight. The group includes Groupon co-founder and CEO Andrew Mason; Ted Leonsis, the vice chairman emeritus of AOL LLC; and Mellody Hobson, president of Chicago-based Ariel Investments.
Groupon indicated last week that its board might be changing its makeup after its initial public offering last year. The company has struggled since going public. In late March, it restated its fourth-quarter and full-year revenue, citing “material weakness” in financial controls. Groupon’s stock has seen a dramatic drop since its disclosure, falling more than 40 percent.
After the announcement shortly before the market close, Groupon shares finished down $1.27, or 10.6 percent, at $10.71. They were up 4 cents in after-market trading.
Henry, 62, has been CFO at American Express since 2007 and has worked at the credit card company since 1990. He was previously a partner with Ernst & Young, the global accounting firm that was Groupon’s auditor during the IPO process and beyond. Groupon has brought on an additional firm since disclosing its material weakness and restating its revenues, although the board is recommending that shareholders ratify Ernst & Young as the company’s independent registered public accounting firm for the 2012 fiscal year.
Bass is also 62 and has been a partner at Deloitte since 1982. Groupon said his expertise includes e-commerce and Securities and Exchange Commission filings. Groupon’s proxy, filed Monday, said “his experience at the highest levels of a Big Four accounting firm will be an invaluable resource to the board in its oversight of the company’s SEC filings.”
Neither Schultz nor Efrusy are leaving the board because of disputes over Groupon’s operations, the company said in a Monday regulatory filing.
“Howard and Kevin helped guide us on our journey to becoming a public company and I want to thank them and acknowledge their contributions,” Mason said in a statement.
Schultz and Efrusy offered statements of support for Groupon. Schultz joined the company’s board in February 2011. Efrusy is a partner at venture capital firm Accel Partners, which led a $30 million investment round in Groupon in December 2009.
Besides recruiting new directors, Groupon is also adding senior executives. It recently named senior vice presidents for international operations and the Americas.
Its proxy statement filed Monday showed a massive decline in annual compensation for Mason. According to the filing, the CEO’s total compensation fell to $7,943 from $184,599 in 2010, stemming from Mason’s request to cut his 2011 base salary to $756.72 from $180,000. He also asked not to receive any bonuses or equity-based awards during the year because of his “substantial equity ownership” in the company, according to the proxy. In 2010, Mason received a $350,000 bonus.
Mason owns 7.1 percent of Groupon’s Class A common stock and 41.7 percent of the company’s Class B common stock. The Class B stock is divided among Mason, Lefkofsky and fellow co-founder and director Brad Keywell.
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