Priceline CEO ousted after having at-work relationship
The Priceline Group (PCLN) CEO Darren Huston resigned from the company Thursday after an in-house investigation into a relationship he had with a fellow employee.
Huston's departure is effective immediately, the company said, and former CEO and current Chairman Jeffery Boyd will serve as interim CEO and president of The Priceline Group while the board looks for a successor. Gillian Tans will become Booking.com CEO, another position Huston held; she has been Booking.com's chief operating officer since September 2011 and its president since January 2015.
Huston, who had served as Priceline Group CEO since January 2014, resigned after an internal investigation, conducted by independent board members, into a personal relationship that Huston had with another employee not under his direct supervision, the company said in a statement.
CEOs depart after bad behavior
The investigation found that 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," the company said.
Huston will not receive severance payments, according to a document filed by Priceline with the Securities and Exchange Commission. However, the company will pay to relocate him to North America from Amsterdam, where Booking.com is headquartered.
Workplace and other improper relationships have been the downfall of several other executives CEOs caught behaving badly in recent years. In November 2012, Christopher Kubasik, then-Lockheed Martin's president, vice chairman and chief operating officer, resigned shortly after being named CEO amid an internal investigation into a close personal relationship with a subordinate.
Hewlett-Packard CEO Mark Hurd resigned in August 2010 before an internal probe found that he violated conduct standards by falsifying reports to mask travel and food expenses spent on a former marketing contractor. Also in 2010, Best Buy CEO Brian Dunn resigned after an inappropriate relationship with a female employee.
Huston's resignation “was not related in any way to the company’s operational performance or financial condition," said company spokesman Leslie Cafferty.
During his four-plus years at The Priceline Group, the company's market value grew by 173% and operating profits increased from $1.40 billion in 2011 to $3.26 billion in 2015. Staffing rose from about 5,000 to more than 15,000 at the end of 2015.
"I am satisfied with the board's thorough review of this issue," said James Guyette, who was the lead independent director on the investigation and will also oversee the CEO search committee. "The performance of the business under Darren has been strong, and the company is very well-positioned to continue executing on its strategy for growth. Jeff is deeply familiar with the company's strategy and leadership team, which consists of highly accomplished entrepreneurs and seasoned professional executives with long tenure in the business. We are confident the company is in strong hands while we conduct a search for a new CEO."
Boyd was the company's president and CEO from 2002 to 2013. "The culture of our brands and the quality of our leadership have been critical to the Group's success over the years," he said in a statement. "I commend Gillian on her promotion to CEO of Booking.com and I am confident she will do a great job leading the business. The outstanding leadership of our independent brands — Booking.com, priceline.com, Kayak, Agoda, Rentalcars.com and OpenTable — have an excellent track record of executing on what I believe is a winning strategy. The Board and I continue to see tremendous potential to build the Group's global platform and create value for our stockholders."
The Priceline Group has six travel-related companies: Priceline.com, Booking.com, Kayak, Agoda.com, Rentalcars.com and OpenTable.
Priceline (PCLN) shares closed Thursday down 2.7% to $1,317.59.
At investment banking firm Stifle, Internet Equity Research Director Scott Devitt issued a "Hold" rating on the stock. He noted that Boyd had ushered the company from reporting a net loss — and shares were priced below $10 — to "a leading global online booking platform."
With Boyd as CEO, Priceline bought Booking.com in 2005 for $133million and now makes up "a majority of its business and helped propel the company into its strong market position today," Devitt said. "We are constructive on Mr. Boyd's return and believe he will ease investor concerns during the board's search for a permanent CEO."
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