Groupon fires CEO, still faces underlying problems
LivingSocial, Groupon's closest competitor, laid off 9 percent of its workforce late last year. To diversify its business, Groupon has expanded into product sales, payments services and other areas, but there have been worries that those efforts haven't been paying off.
Mason, known for an eccentric character that didn't fit the mold of a buttoned-down CEO, made no qualms about what had happened.
"I've decided that I'd like to spend more time with my family. Just kidding — I was fired today," wrote Mason, 32. "If you're wondering why... you haven't been paying attention."
He referred to controversy over its accounting practices, "two quarters of missing our own expectations and a stock price that's hovering around one quarter of our listing price." The stock fell another 24 percent Thursday before the announcement and closed at $4.53, 77 percent below the $20 it started trading at when Groupon went public in November 2011.
"The events of the last year and a half speak for themselves," he wrote. "As CEO, I am accountable."
Groupon, which is based in Chicago, has faced scrutiny about its high marketing expenses and enormous employee base. Its staff has ballooned to more than 11,000, more than that of other Internet darlings such as Twitter, Facebook or Zynga Inc., the other fallen star of the latest swath of Internet IPOs.
Groupon's IPO was one of the most highly anticipated — and controversial — among the social media and Internet companies that began publicly trading in the past year and a half. It faced regulatory scrutiny for reporting as revenue the total amount its customers spent on deals, not just the money it got to keep. After federal regulators questioned the practice, Groupon submitted new documents that showed that net revenue in the first half of 2011 was about half of what it originally reported.
Though it made a profit in the second quarter of last year — its only profitable quarter as a public company — investors have been more focused on its slowing revenue growth. In 2012, its first full year as a public company, Groupon's revenue increased 45 percent to $2.33 billion. But that's much slower than the five-fold growth in 2011 and 22-fold increase in 2010, compared with the previous years.
Thursday's announcement came one day after more disappointing news on revenue. The company said revenue in the current quarter would be in the range of $560 million to $610 million, below analyst expectations of $647 million.
Groupon said Mason was not available for interviews.
The company did not disclose details about any severance package he might have received, though it will be required to do so by next week. In a regulatory filing last year, Groupon said Mason is potentially entitled to $4,344.36 in total compensation if he is fired "without cause or for good reason." The bulk of that amount is for health coverage, as Mason voluntarily reduced his base salary to $756.72 in 2011, from $180,000.
Much of Mason's wealth comes from Groupon's stock. He owns 7 percent, or about 46 million shares, according to FactSet. Based on Thursday's closing price of $4.53, that's worth more than $208 million.
Groupon's stock hasn't traded above $10 since last July and hit its lowest point, $2.60, in November. Until Wednesday's earnings report, the stock had been crawling back up, but the results disappointed investors who sent it tumbling once again.
On Friday, the stock added 57 cents to close at $5.10. The nearly 13 percent gain was modest compared with the 24 percent drop Thursday, before the announcement. It's a sign that investors will need more than the CEO's firing to start believing in Groupon again.