October 3, 2017
In the latest drama at the troubled Uber, former chief executive Travis Kalanick appointed two new directors — former Xerox chief executive Ursula Burns and former Merrill Lynch chief John Thain — to the board, without informing new chief executive Dara Khosrowshahi or current board members. The likely trigger for Kalanick’s action was a proposal that included reducing his voting power and increasing Khosrowshahi’s. By adding two members to the nine-member board, Kalanick attempted to gain new allies.
The New York Times reports that Khosrowshahi described Kalanick’s action as “disappointing. “Anyone would tell you that this is highly unusual,” he added.
Khosrowshahi and Uber shareholder Goldman Sachs planned to bring a proposal to the board on Thursday that, in addition to the shift in voting power, would also set a 2019 deadline for the company to go public, according to sources. Kalanick’s effort to “reassert control … has now plunged Uber into another period of uncertainty and a corporate governance crisis.”
What precipitated Khosrowshahi and Goldman Sachs’ actions were “part of a bigger effort to finalize a deal to sell billions of dollars of Uber stock to the Japanese conglomerate SoftBank,” because some of Uber’s early investors stated they would not sell their shares to SoftBank,”unless Uber’s governance structure changes and Kalanick is barred from returning as chief executive.” Among those is venture capital firm Benchmark, an early investor that has “more recently been warring with Kalanick over his control of the company.”
Part of the plan would “allow Kalanick to keep his board seat, subject to the approval of Khosrowshahi,” but also switch two other board seats that Kalanick controls to a SoftBank representative and “the chief executive of a Fortune 100 company.” The plan would need to be approved “by the majority of the board and a majority vote of all shareholders.”
Sources say that, “for now, most of Uber’s directors are reluctant to oppose the new board appointments.” Burns, who is the first African-American woman to head a Fortune 500 company, and Thain, “could potentially help Uber address issues around company culture and diversity, and better prepare it to go public.”