Mark Okerstrom, the CEO of Expedia and a veteran executive at the Seattle-based online travel giant, has resigned following a disagreement between senior leadership and the board, the company said on Wednesday.

Chief Financial Officer Alan Pickerill also resigned.

Barry Diller, chairman of the board, and vice chairman Peter Kern, will oversee the company’s executive leadership team, managing day-to-day operations, while the board seeks replacements for the two executives.

The resignations follow an Expedia shareholder meeting on Tuesday afternoon. It’s unclear whether the decision to oust Okerstrom and Pickerill was made during that meeting.

“Ultimately, senior management and the Board disagreed on strategy,” Diller said in a statement. “Earlier this year, Expedia embarked on an ambitious reorganization plan with the goal of bringing our brands and technology together in a more efficient way.

“This reorganization, while sound in concept, resulted in a material loss of focus on our current operations, leading to disappointing third-quarter results and a lackluster near-term outlook. The Board disagreed with that outlook, as well as the departing leadership’s vision for growth, strongly believing the Company can accelerate growth in 2020. That divergence necessitated a change in management. Mark Okerstrom is a talented executive and his 13 years of service to Expedia has greatly benefited the enterprise. The Board and I wish him the best for the future, as we do for Alan Pickerill.

Expedia Chairman Barry Diller. Photo credit: JD Lasica/Flickr

“I will be purchasing additional shares in the Company as a tangible sign of my faith in and commitment to Expedia’s long-term future,” added Diller.

In a research report entitled “Barry’s The Captain Now!,” Evercore ISI analyst Lee Horowitz wrote Wednesday that “all in all, new blood at the top, particularly a management team handpicked by Barry Diller, should instill a new sense of confidence among investors that challenges can be rectified, and that ‘the company can accelerate growth in 2020.'”

Diller and Kern plan to address Expedia employees in Seattle at a town hall meeting on December 19.

Expedia has struggled lately, particularly in its most recent quarter. As Skift reported, a shift toward higher-cost marketing channels are negatively impacting Expedia Group‘s financial results, and the online travel agency finds itself caught up in — and preoccupied with — an internal reorganization.

What’s more, Expedia Group lowered its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth guidance to 5 percent, from 8 percent, for 2019.

Although the company notched what it considers to be healthy room night growth of 11 percent in the third quarter, it saw its adjusted earnings come in lower than expected as Google shifted more volume toward its own paid products, forcing Expedia in a “related shift” to lean into “higher-cost marketing channels,” Okerstrom said on an earnings call.

In the third quarter, Expedia adjusted earnings were flat, and net income fell 22 percent to $409 million. Revenue climbed 9 percent to $3.6 billion.

The company also announced plans to repurchase an additional 20 million shares in an attempt to bolster share price. That now bring shares under its repurchase program to 29 million.

Expedia shares were up nearly 7 percent in early trading on Wednesday.

What seems increasingly troubling for Wall Street analysts is Google.

In a report issued after the executive shakeup news Wednesday, PiperJaffray analysts said: “In our view, the most concerning trend is the reduced efficiency of SEO (search engine optimization) marketing as Google pushes ‘free’ links’ further down the page. In particular, Google is favoring its own ‘Hotel Finder’ platform, along with other paid links, all of which are capturing more real estate on page one of the search results.

“Expedia is, therefore, having to resort to the use of higher cost marketing channels, which is negatively impacting marketing ROI and EBITDA,” the report continued.  “Additionally, Trivago is performing below plan, likely due to the same SEO issues that Expedia’s core OTA business is facing.”

You can read Expedia’s full press release below.

SEATTLE, Dec. 4, 2019 /PRNewswire/ — Expedia Group, Inc. (NASDAQ: EXPE) today announced the resignation of Mark Okerstrom as CEO and a member of the Board of Directors and CFO Alan Pickerill, effective immediately.

Barry Diller, Chairman of the Board, and Vice Chairman Peter Kern, Director of Expedia, will oversee the company’s executive leadership team, managing day-to-day operations, while the Board determines the long-term leadership of the Company.

Eric Hart, the Company’s Chief Strategy Officer, will serve as acting CFO. Ariane Gorin, who most recently served as President of Expedia Partner Solutions, is being promoted and will have an expanded role as President, Expedia Business Services.

The Company also announced today a new share repurchase authorization for up to an additional 20 million shares of the Company’s common stock, which is in addition to the 9 million shares available under the Company’s existing authorization. Accordingly, the Company now has approximately 29 million shares available under its repurchase program.

Chairman Barry Diller said “Ultimately, senior management and the Board disagreed on strategy. Earlier this year, Expedia embarked on an ambitious reorganization plan with the goal of bringing our brands and technology together in a more efficient way. This reorganization, while sound in concept, resulted in a material loss of focus on our current operations, leading to disappointing third quarter results and a lackluster near-term outlook. The Board disagreed with that outlook, as well as the departing leadership’s vision for growth, strongly believing the Company can accelerate growth in 2020. That divergence necessitated a change in management. Mark Okerstrom is a talented executive and his 13 years of service to Expedia has greatly benefited the enterprise. The Board and I wish him the best for the future, as we do for Alan Pickerill.”

“I will be purchasing additional shares in the Company as a tangible sign of my faith in and commitment to Expedia’s long-term future,” added Diller.

Vice Chairman Peter Kern said, “While we share and understand the investment community’s unhappiness with our third quarter results and how 2019 has shaped up overall, we are keenly focused on the future and all of the opportunities ahead of us. We believe there is significant opportunity for Expedia to grow revenue and margins in what is a still a very dynamic online travel industry. The Company has an exceptionally strong and deep executive leadership team in place. Barry and I, as well as the entire Board, look forward to working closely with them in the period ahead, as well as over the long-term. Additionally, we intend to use our strong balance sheet to continue and amplify our stock repurchase program, given our belief that the market currently undervalues our company.”

Mr. Diller has been Chairman of the Board of Expedia Group since February 4, 2002 when IAC/InterActiveCorp (“IAC”) acquired a controlling interest in Expedia and has been Senior Executive of Expedia since the completion of the Company’s spin-off from IAC on August 9, 2005.

Mr. Kern has been a director of Expedia Group since 2005 and has served as Vice Chairman of Expedia Group since June 2018. Mr. Kern was most recently CEO and board member of Tribune Media Company and is Managing Partner of InterMedia Partners VII, LP, a private equity firm. Mr. Kern also serves as Chairman of Hemisphere Media Group, Inc., and is on the board of Trivago N.V.

Tags: execs, expedia
Photo Credit: Expedia Group President and CEO Mark Okerstrom speaking at Skift Global Forum in New York City on Sept. 19, 2019. Skift