Groupon (NASDAQ: GRPN) has been humiliated by several financial mistakes that have rattled investor confidence to the core. The responsibility belongs at someone’s feet, and that someone is Groupon’s chief financial officer, Jason Child. Child has been at Groupon since December 2010, so he has been in charge of the firm’s accounting each time there has been a misstep. The triumvirate who have to make the decision is composed of CEO Andrew Mason, Chairman Eric Lefkofsky and audit committee chair Ted Lionsis.
The firing of Child would bring Groupon some measure of investor respect, particularly if the company brings in a reputable CFO. It would have to be someone with a track record of handling the finances of a company that has not had any restatements or “material weakness in internal controls,” which was the excuse for the last change in Groupon’s filed financials. Groupon filed another revision to its financials in September that cut revenue in half for 2010 — from $645 million to $313 million. Groupon also revised how it accounted for what it said was “Adjusted Consolidated Segment Operating Income” — a term that was new to investors and the Securities and Exchange Commission.
Child made $350,000 in base salary in 2010. In addition, the value of his stock awards was $9,477,000. In return, investors have received a share price that has fallen from a peak of $31.14 to $17 after the news of the restatement hit. Groupon has lost $8 billion in market cap due to that drop.
It is hard to imagine that any other major company would keep its CFO under similar circumstances. Child should be fired right away.
Douglas A. McIntyre
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