(Reuters) - Priceline Group Inc said on Thursday that Chief Executive Darren Huston has resigned, effective immediately, after an investigation found that his personal relationship with an employee violated the company's code of conduct.
The investigation into Huston's relationship with the employee, who was not under his direct supervision, determined that he had engaged in activities inconsistent with the board's expectations for executive conduct, Priceline said.
The travel website operator said the 50-year-old Huston, who has been the company's CEO since January 2014, had acknowledged his misconduct and expressed regret.
Priceline named chairman and former CEO, Jeffery Boyd, as interim CEO.
"Despite this surprising news, we remain constructive on Priceline shares," RBC Capital Markets analyst Mark Mahaney wrote in a note to clients.
"Having former CEO Jeff Boyd return as interim CEO will provide continuity, experience, and leadership," he added.
Priceline's shares were down 1.2 percent at $1,337.58 in afternoon trading on the Nasdaq, amid a slight dip in the broader market.
The investigation and Huston's resignation was not related in any way to the company's operational performance or financial condition, Leslie Cafferty, a company spokeswoman, told Reuters in an email.
Priceline said Huston will also step down as CEO of Booking.com, a unit of Priceline, and be replaced by Chief Operating Officer Gillian Tans.
He will not receive any severance payments and forfeit a portion of his equity-based awards, Priceline said in a regulatory filing. His annual compensation was close to $22 million for 2014, according to a company filing.
Huston joined the company in September 2011 and one of his first major moves after becoming CEO was to acquire restaurant reservation website operator OpenTable Inc for $2.6 billion to broaden Priceline's services outside the increasingly competitive online travel industry.
Priceline, Expedia Inc and other travel companies have been facing increased pressure in their hotel bookings business from the rise of apartment-sharing startups such as Airbnb.
One of Huston's last deals was to sign an agreement with TripAdvisor Inc in October last year, allowing Booking.com customers to directly book hotel rooms on the travel review website operator.
The company's revenue has increased nearly 36 percent since Huston became CEO in January 2014.
Since then, Priceline's shares have risen about 16.5 percent through Wednesday's close, outperforming a 13.4 percent increase in the benchmark S&P 500 index.
Huston's resignation comes a week before the company is scheduled to report second-quarter results on May 4.
Reporting by Sweta Singh in Bengaluru; Editing by Anil D'Silva and Savio D'Souza