Sonnenfeld On Expedia Firings: Barry Diller And The Board Are “Lost”

The abrupt dismissal of Expedia CEO Mark Okerstrom and CFO Alan Pickerill has had analysts and investors scratching their heads, puzzling over why the board would take such drastic action over a disagreement on strategy.

“It’s an odd execution,” Jeffrey Sonnenfeld, longtime Chief Executive columnist and president of the Yale Chief Executive Leadership Institute, told CNBC. “Why do they need to fire these guys, sort of kill them at sunset like this, unless there was some gross incompetence or gross misconduct?”

Particularly odd, he added, was the fact that the board seemed to have no succession plan in place, announcing that Chairman Barry Diller and Vice Chairman Peter Kern would step in to manage the day-to-day until the board figures out what comes next. “To drive the CEO and CFO out at once is pretty strange,” said Sonnenfeld, adding that a strategy disagreement seemed a fairly thin explanation. He also noted that this shakeup follows a July organizational restructuring that pushed out Aman Bhutani, who had been president since 2015. “It’s hard to see what they’re doing here.”

In a statement issued by the company, Diller wrote that the board disagreed with Okerstrom and Pickerill on their “ambitious reorganization plan” to bring Expedia’s “brands and technology together in a more efficient way.” The 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,” he wrote. Kern added that the board still believes “there is significant opportunity for Expedia to grow revenue and margins in what is a still very dynamic online travel industry.”

Sonnenfeld is skeptical that this will solve the challenges of a company that is lost in the “alphabet soup” of its own online travel brands, including Travelocity, Trivago, Orbitz, Hotwire and Hotels.com. “They’re all stapled together,” he said. “At least the CEO and CFO who were fired were trying to unify a tech platform and maybe these brands need to be consolidated. There’s way too much capacity in this space.”

As far as whether Diller and the Expedia board have the vision to lead the company out of its current financial woes, Sonnenfeld is skeptical. “I think they’re lost. I really don’t think they know what to do with this business,” he said. “You know, a 78-year-old is not incapable of figuring out new things. I think Joe Biden, Nancy Pelosi, President Trump, Bernie Sanders, I think they have a lot to offer besides being late [septuagenarians] but I can’t see what Barry Diller is going to bring to the business right now.”

The shakeup, meanwhile, hasn’t hurt Expedia’s share price, which had tanked in early November after the company reported third-quarter earnings; in response to the announcement, the stock jumped as much as 7.6%. But it might have helped that the board simultaneously announced a 20-million-share buyback, with Diller promising to personally purchase more shares as a “tangible sign of my faith” in the company.