Expedia announced Wednesday that CEO Mark Okerstrom and CFO Alan Pickerill are stepping down because of a fight over the travel company's strategy.
Shares of Expedia climbed as much as 8.6% in early trading following the announcement.
Expedia Chairman Barry Diller will manage day-to-day operations and will oversee its executive leadership team. The board will focus on a plan for long-term leadership. Eric Hart, Expedia's chief strategy officer, will serve as acting chief financial officer, the company said.
Diller said the leadership changes resulted from disagreements over strategy between senior management and the board. The company is in the midst of a broad reorganization that aims to simplify its portfolio of brands.
"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," Diller said in a statement. "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."
Diller addressed the move in a memo to employees, describing the shakeup as an "unfortunate and difficult situation," but added that it was part of a "new beginning" at the company. Diller and Peter Kern, Expedia's vice chairman, plan to meet with employees to discuss the leadership shakeup at a town hall meeting in Seattle on Dec. 19.
Okerstrom moved up from CFO to CEO in 2017 when then-CEO Dara Khosrowshahi left the company to become chief executive of Uber.
Expedia shares have underperformed this year, with shares down 6.9%. The stock came under further pressure after Expedia reported disappointing third-quarter results earlier this month. Okerstrom blamed poor visibility in Google search results and weak revenue in Expedia's Vrbo and Trivago businesses for the earnings miss.
Read the full letter from Diller to employees:
Just a few minutes ago, the Company announced that Mark Okerstrom and Alan Pickerill have resigned from their roles at Expedia effective immediately.
Peter Kern, our Vice Chairman, and I, 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, our Chief Strategy Officer, will serve as acting CFO.
We are creating an Expedia Business Services organization which will be comprised of Expedia Partner Solutions and Egencia. Ariane Gorin, who most recently served as President of Expedia Partner Solutions, is being promoted and will have an expanded role as President of Business Services. Rob Greyber will report to Ariane, and together they will identify opportunities for our teams to sharpen our focus on EG B2B customers globally in 2020.
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.
This is of course an unfortunate and difficult situation. I promise you the decision was taken with great consideration and I also promise you that Peter and I will do all we can to minimize any disruption.
The Board made this change to Expedia's leadership because we disagreed on strategy with the departing senior executives. As you all know, 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.
Saying thank you to departing managers is often pro forma in these situations. In this case, though, it is truly meant. Mark and Alan's long service to Expedia have greatly benefited the enterprise. They are both fine executives and we sincerely wish them the best for the future.
I am sure there will be plenty of questions about these changes to the organization, and we are happy to provide answers to them. But now is not the time to be distracted. We need to concentrate on the tasks at hand and get back to business. 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.
The work Mark began, to break down silos and focus on the whole company, is keenly important to our future. We expect all of you, regardless of where you reside in the company or how your role might have recently changed, to look to make the whole better – to simplify processes, to improve collaboration, and to set all of us up for success.
Please join me in congratulating Eric and Ariane and wishing them godspeed in their new roles. They have both proven to be exemplary leaders throughout their tenures at Expedia.
I've spent a great deal of time with our leadership team, have great confidence in each of them individually, and have the greatest confidence that collectively we'll set new goals and strategies that will quickly build back momentum both internally and externally.
We are scheduling a town hall for December 19 in Seattle where Peter and I will talk more with you in person and answer your questions.
This is a sad day for all of us, as we see long-time, respected and trusted colleagues depart. There is no way I can tell you this isn't a difficult day. But I can tell you that this momentary misstep also represents a new beginning. You are part of a great company, the world's leading travel platform, that is strong both financially and with its superb work force. It's not that I'm disinterested in my other businesses, but for the last 18 years I've always truly loved being associated with travel and with Expedia and our iconic travel brands. We bring pleasure and purpose to so many lives, and as was once said at the time of our original purchase, "If there's life, there's travel." I've bet on that for almost two decades and nothing will deter me from helping make that bet continue to come through.
Please join with me and Peter and all of our colleagues in making for better days ahead.
Sincerely/Barry Diller
--CNBC's Seema Mody contributed to this report.