Groupon Inc (GRPN.O) appointed two new directors on Monday and said Starbucks Corp (SBUX.O) 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 (AXP.N), 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.
(Reporting By Edwin Chan; editing by Bernard Orr, Matthew Lewis and Andre Grenon)