Priceline Group CEO Darren Huston has resigned from his position, effective immediately, following a disclosure of a “personal relationship” with an employee, the company said today in an SEC filing.
Jeffrey Boyd, the former CEO and Chairman of the Board, is taking over as interim CEO. Huston had also served as CEO of Booking.com since 2011. Booking.com President and COO Gillian Tans will move into the CEO role at Booking.com. In a statement, Boyd said, “The culture of our brands and the quality of our leadership have been critical to the Group’s success over the years. I commend Gillian on her promotion to CEO of Booking.com and I am confident she will do a great job leading the business.”
Huston will get no cash bonus for 2016 or severance after an investigation found that he had a personal relationship with a female employee who was not under his direct supervision. The investigation into Huston’s conduct was believed to have taken several weeks.
He must forfeit any unvested equity awards but gets to retain a prorated portion that Huston earned during his tenure. Huston also gets relocation expenses, per his employment agreement.
“This did not involve issues about the company’s financial statements, accounting or internal controls over financial reporting,” Priceline Group spokesperson Leslie Cafferty said. “This resignation was not related in any way to the company’s operational performance or financial condition.”
It is believed that the company considered other options, such as discipline, short of firing Huston but the investigation ultimately concluded that he had to go.
Tans’ appointment as CEO of Booking.com, the Group’s largest and most important brand, is permanent in nature as she does not have an interim tag tied to it.
Meanwhile, Boyd, who reassumes his role as CEO of the Priceline Group — a role he stepped away from at the end of 2013 — intends to indeed stay on as only interim CEO while the board conducts a search for a permanent CEO. That search will consider in-house and external candidates.
Boyd, as chairman of the Group, has been heavily involved in board-level matters but not in the day-to-day operations of the company. Boyd remains as chairman of the Priceline Group.
In an exclusive interview with Skift March 17, Boyd described his role at the time at the Priceline Group.
“I’m a non-executive chairman, which means that my role is more at the board level,” Boyd said.
Boyd added at the time that he “certainly engages with management in strategy in our board meetings throughout the year, but I’m not involved in the day-to-day operations of the business. I worked with Darren very closely on the transition and we certainly still talk about things form time-to-time. Darren runs the company.”
In a note this morning to investors, Piper Jaffray research analyst Michael Olson said he believes the shakeup’s risk to operational performance is “relatively minimal.”
“We do not see this as a risk to near-term financials, but it does pose a slight risk of distraction for employees of the company’s Booking.com segment as well as investors,” Olson wrote in the note. “Given Priceline’s unit structure that has each brand operating autonomously and reporting to dedicated operating management teams, we believe the risk to operational performance is relatively minimal.”
Huston’s “resignation” from the Priceline Group was effective April 27, 2016.
Huston, according to a Securities and Exchange Commission filing, agrees to cooperate in any additional investigations, litigation or regulatory inquiries.
Huston had assumed the role of Group CEO on January 1, 2014 but had been CEO of the Group’s flagship Booking.com since 2011. He had previously been at Microsoft.
During Huston’s 4.5-year tenure at the Group, its room nights booked tripled and from 2011 to 2015 the Priceline Group’s market cap rose 173 percent.
The Group’s operating profits increased from $1.4 billion in 2011 to $3.26 billion in 2015 while the employee roster climbed from about 5,000 to more than 15,000 through the end of 2015.
During his two-plus years as Priceline Group CEO, Huston choreographed the company’s $2.6 billion acquisition of OpenTable, a company that has not seen the pace of international growth as initially envisioned.
During Huston’s time in the CEO post the company sought to get heavily involved in the business-to-business side of the hotel business with its launch of marketing and booking engine services for the hotel industry in the form of BookingSuite.
The Priceline Group has labored intensively to onboard vacation rental and apartment properties, considered acquiring HomeAway before Expedia did, but opted not to spend $4 billion to do so, as Expedia did.
The SEC filing by Priceline Group this morning:
On April 27, 2016, the Board of Directors (the “Board”) of The Priceline Group Inc. (the “Company”) appointed former CEO and current Chairman Jeffery H. Boyd as Interim Chief Executive Officer and President, effective immediately, while the Board conducts a search to name a successor. The appointment followed the resignation of Darren Huston as President and Chief Executive Officer and as a Director. The Board has established a committee, to be chaired by Mr. James M. Guyette, Lead Independent Director, to identify Chief Executive Officer candidates.
The Company also announced that current Booking.com President and Chief Operating Officer Gillian Tans has been named as Chief Executive Officer of Booking.com, a Priceline Group subsidiary, replacing Mr. Huston who also served as Chief Executive Officer of that business unit.
Mr. Huston resigned following an investigation overseen by independent members of the Board of Directors of the facts and circumstances surrounding a personal relationship that Mr. Huston had with an employee of the Company who was not under his direct supervision. The investigation determined that Mr. Huston had acted contrary to the Company’s Code of Conduct and had engaged in activities inconsistent with the Board’s expectations for executive conduct, which Mr. Huston acknowledged and for which he expressed regret.
In connection with Mr. Huston’s resignation, the Company and Mr. Huston entered into a separation letter, dated April 27, 2016. Under the terms of the letter, the Company and Mr. Huston have agreed, among other things, to the following:
- Mr. Huston will not receive any severance payments;
- Mr. Huston will receive pro rata vesting based on time served of his outstanding equity awards (as contemplated by his employment agreement for certain terminations, except that the performance multiplier for his 2015 performance share units is reduced from the multiplier provided for by the terms of the equity agreement based on the Company’s historical financial performance to 1);
- The Company will pay for the cost of reasonable relocation expenses to North America (as contemplated by his employment agreement for certain terminations); and
- Mr. Huston will continue to be bound by the non-compete, non-solicitation and proprietary information covenants contained in his employment agreement.