* Groupon accounting practices under fire
* Shares fall more than 10 pct on board news
* Henry joined board on Friday
* Bass needs election at June shareholders’ meeting
By Alistair Barr
April 30 (Reuters) – Groupon Inc appointed two new
directors on Monday and said Starbucks Corp Chief
Executive Howard Schultz and venture capitalist Kevin Efrusy
were leaving the board as the company tries to address criticism
of its accounting practices.
Groupon said Robert Bass, a Deloitte LLP vice chairman, and
Daniel Henry, chief financial officer of the American Express Co
, will join its board and serve on the audit committee.
Henry joined last Friday. Bass needs to be elected at the June
shareholders’ meeting.
Groupon shares fell more than 10 percent to finish at $10.71
on the Nasdaq following the board news shortly before the
closing bell. In after-hours trading, the stock edged up 4 cents
to $10.75.
“People were hoping they were going to augment the board
rather than replace directors,” said Daniel Ernst, an analyst at
Hudson Square Research, who noted the loss of Starbucks’ Schultz
was a particular blow.
“It was great to have Schultz on Groupon’s board, so it’s
not great to lose him,” Ernst added. “Schultz is a very
successful retail and consumer entrepreneur and company
manager.”
Maveron, an investment firm Schultz co-founded in 1998, was
an investor in Groupon before the company’s IPO. Schultz said in
a statement on Monday that he was leaving Groupon’s board to
focus on “other time commitments.”
The world’s largest daily deals company came under renewed
fire in March after revising its fourth-quarter financial
results and admitting to a “material weakness” in its financial
statements, months after its high-profile IPO.
Groupon’s audit committee was criticized because some
members are busy executives who may not have enough time to
devote to fixing the company’s accounting problems.
Henry, 62, was a partner at accounting firm Ernst & Young
before joining American Express.
Bass, also 62, has been a vice chairman of accounting firm
Deloitte LLP since 2006. He is due to retire from Deloitte on
June 2.
While the board departures were negative, the appointment of
accounting specialists, especially Amex’s Henry, will help
Groupon, according to Herman Leung, an analyst at Susquehanna
Financial Group.
“He’s the kind of guy who can provide a little bit of adult
supervision for the company on the accounting side,” Leung
added.
