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Groupon is recruiting new directors to reassure investors

April 24, 2012|Bloomberg News

Groupon Inc. is seeking to add at least two directors to its board in a bid to regain investor confidence after a restatement of revenue last month, two people familiar with the matter said.

The largest provider of online daily deals aims to recruit a new director who could eventually lead its audit committee, said one of the people, who asked not to be named because the plan is private. Potential candidates include chief financial officers at publicly traded companies, the person said.

Groupon is responding to criticism that it misled investors after reporting a "material weakness" in financial controls and lower fourth-quarter revenue than previously stated. The Chicago company's stock has dropped 35% since the March 30 announcement, and Groupon officers, directors and underwriters were named in a lawsuit filed by investor Fan Zhang in Chicago federal court this month.

"New blood would be good, particularly if they have strength in some of the areas they seem to be lacking right now," said Edward Woo, an analyst at Ascendiant Capital Markets in Irvine. "They need somebody with a skill set to help them stop doing these accounting irregularities."

New directors would add to an eight-person board that includes Groupon founder and Chief Executive Andrew Mason and Howard Schultz, the founder and CEO of Starbucks Corp.

Paul Taaffe, a spokesman for Groupon, declined to comment on potential changes to the board.

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