Barry Diller told Expedia employees that it's not hunting for a replacement for its ousted CEO, and some insiders are worried the $16 billion company is heading for a sale
Barry Diller, Chairman and Senior Executive of IAC/InterActiveCorp and Expedia, Inc., smiles at the Wall Street Journal Digital Conference in Laguna Beach, California, U.S., October 17, 2017.
- Expedia Chairman Barry Diller told employees last month at an all-hands meeting that the company is not searching for a new CEO.
- It's not immediately clear if this means that the company has already made a decision as to its leadership structure.
- The role has been vacant since Mark Okerstrom resigned as CEO last month over a "disagreement" with the board. Okerstrom himself was the replacement for Dara Khosrowshahi, who famously left Expedia in 2017 to lead Uber.
- The company is said to be looking at ways to cut costs, which includes a hiring freeze for most teams, and some employees are concerned about layoffs. An Expedia spokesperson said there is no hiring freeze.
- The changes have led to speculation among employees that Expedia leaders are positioning the company for a sale. Expedia declined to comment.
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Expedia is not searching for a new CEO, following the abrupt departure of Expedia chief exec Mark Okerstrom and Chief Financial Officer Alan Pickerill, who left in early December, Business Insider has learned.
The news was shared with employees by Expedia Chairman Barry Diller, according to several people familiar with the matter, including at an all-hands meeting in December. At least for now, Diller - the media mogul who helped start the Fox and USA broadcasting companies - and Expedia vice chairman Peter Kern have taken over day-to-day operations at the company.
The reasoning behind the decision not to search for a CEO, or when the decision was made, is not clear. It's similarly not clear if this means that a decision has already been made as to the leadership of the company, or whether this indicates the interim arrangement will be made permanent.
However, the announcement, and a recent focus on cost-cutting, has led to speculation among at least some employees that the $16 billion online travel company is heading for a sale, sources close to the company say - stoking fears internally of layoffs.
Expedia declined to share specifics about the CEO search, and declined to comment on whether the company is planning layoffs or exploring a sale.
The changes came only weeks after the departure of Okerstrom and Pickerill, which Expedia said at the time was the result of disagreements with the board related to a company reorganization. In a press release announcing the move, the company did not explicitly announce a CEO search process, saying only that Diller and Kern would take over the day-to-day affairs of the company "while the Board determines the long-term leadership of the company."
Sources also said Expedia has enacted a hiring freeze on most teams, although one source said that's not uncommon for the company. That source also said the company is moving forward with a big new project, seeming to indicate that significant downsizing is not on the horizon. The Expedia spokesperson said the company is not in a hiring freeze.
Expedia referred Business Insider to a statement Diller made in an internal email.
"Expedia has an exceptionally strong and deep executive leadership team in place, one Peter and I look forward to working closely with in the period ahead, as well as over the long-term," Diller wrote in the email. "Mine and Peter's energy will go into bringing more acute focus to our day-to-day operations, building on our iconic brands, and getting Expedia back to the growth we all expect."
Barry Diller's influence
Expedia was spun off from IAC, best known as the owner of dating services like Match.com and Tinder, in 2005. Diller is the chairman of IAC, and retained a significant stake in Expedia following the spinoff - enough to give him 48% voting power of the board, according to filings - giving him an outsized amount of influence over the company.
Diller has a unique position at Expedia. His official title at Expedia is "chairman and senior executive," which means he runs the board but also collects a salary. He gets perks, too, like personal use of the corporate aircraft. Expedia counted $600,000 in costs related to Diller's use of the aircraft as part of his 2018 compensation, according to a securities filing.
Diller hand-picks Expedia board members, which over the years have included people from Hollywood media moguls like "The Social Network," "Steve Jobs," and "No Country for Old Men" producer Scott Rudin (who resigned in 2019) to his stepson Alexander von Furstenberg to Chelsea Clinton, also a director at Diller's company IAC.
Even former Expedia CEO Dara Khosrowshahi was hand-selected by Diller. Khosrowshahi, now CEO of Uber, is Diller's long-time protege. Khosrowshahi went to work for Diller in 1998 as chief financial officer and Diller made him Expedia CEO in 2005, not long after IAC acquired the company. Then Khosrowshahi got offered the Uber job in 2017 - a decision he discussed extensively with Diller before accepting.
The board made what might outside the company be considered an unconventional pick to replace Khosrowshahi - Okerstrom, at the time Expedia's CFO. But Okerstrom had a background in the kind of dealmaking Diller valued, and had over the years worked his way into Diller's good graces.
Diller at the time of Okerstrom's hiring said he was the only candidate Expedia's board considered to replace Khosrowshahi.
Their relationship seems to have soured when Expedia embarked on a reorganization and did not achieve the outcomes the board wanted to see.
"Ultimately, senior management and the board disagreed on strategy," Diller said in a statement at the time. "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."
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