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Priceline ( PCLN ) CEO Darren Huston resigned Thursday after an internal investigation into an inappropriate relationship with an employee, but shares were down just a fraction in morning trading. The sudden resignation is effective immediately. Huston resigned without severance and forfeited his unvested stock options, Cowen analyst Kevin Kopelman noted in a research report. Kopelman still rates Priceline stock outperform. Chairman Jeffery Boyd was tapped to lead Priceline as the board searches for Huston’s successor. Boyd served as Priceline CEO from 2002 to 2013 and was succeeded by Huston in January 2014 after a lengthy, planned transition. Booking.com President and COO Gillian Tans was named CEO of that key Amsterdam-based Priceline subsidiary. Boyd initially joined Priceline in September 2011, leaving Microsoft ( MSFT ) to take the Booking.com CEO position. Huston’s resignation stemmed from an independent board investigation into a personal relationship with an employee not under his direct supervision, Priceline said in a statement. “The investigation determined that Mr. Huston had acted contrary to the company’s code of conduct and had engaged in activities inconsistent with the board’s expectations for executive conduct,” Priceline said. Huston acknowledged the conduct and expressed regret, the company said. Priceline stock has risen 14% since January 2014, when Huston took the helm. On the stock market today , Priceline stock was trading up fractionally near 1,348. Shares of rival Expedia ( EXPE ) were up 2.5% Thursday morning, ahead of the company’s Q1 earnings report, due out after the close. Priceline is slated to report Q1 earnings before the open on Wednesday and is expected to post $2.12 billion in sales and $9.65 earnings per share minus items, up 15% and 19%, respectively, vs. the year-earlier quarter. Kopelman foresees minimal disruption stemming from Huston’s exit, but he notes that Priceline could have opened itself up to potential litigation. “It is difficult to gauge this risk, given details of Huston’s misconduct were not disclosed,” Kopelman wrote. “However, Priceline has commented to media outlets that the misconduct did not involve the company’s financial reporting or controls.” Indeed, Priceline spokeswoman Leslie Cafferty told IBD via email: “This did not involve issues about the company’s financial statements, accounting or internal controls over financial reporting. This resignation was not related in any way to the company’s operational performance or financial condition.” RBC analyst Mark Mahaney reiterated his outperform rating on Priceline stock. Boyd’s return will provide “continuity, experience and leadership,” he wrote in a report. Tans’ role as Booking.com CEO is also a key positive, he said. Priceline’s fundamentals remain strong, Mahaney said. “These trends constitute one of the most robust growth and profitability profiles across the Internet sector,” he wrote. Scalper1 News
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