Uber strips power from ousted CEO Travis Kalanick

Chelsea West
October 6, 2017

Uber Technologies Inc.'s board has approved a series of corporate reforms along with a multibillion investment from SoftBank Group Inc. that are created to strengthen the ride-hailing company's governance while at the same time strip power from former Chief Executive Travis Kalanick.

SoftBank previously held discussions on whether or not it should buy a huge portion of Uber's stock, but reports said that depended on whether the company was willing to implement governance changes.

His right to fill those seats is now being challenged in a lawsuit filed by Benchmark, an early investor that owns 13 percent of Uber. One being expanding the board of directors in the company from 11 now to 17 directors. He wrote: "Travis appointed two new members to Uber's Board without discussing it with me or the Board of Directors more broadly".

The first proposal would cut the number of board seats controlled by Kalanick to one from three, increase seats effectively controlled by Khosrowshahi to five from one and eliminate supervoting rights, which give early shareholders multiple votes per share, two of the sources said.

The appointments were a "complete surprise" to Uber and its board, the company has said in a statement. According to Bloomberg, Benchmark encouraged SoftBank to agree to limit Kalanick's voting power as part of the terms of its investment.

Uber ex-CEO Travis Kalanick has become a divisive figure within the company he founded.

He added that the governance changes should serve Uber well under Dara Khosrowshahi, who is a month into the chief executive officer job since leaving the same post at Expedia Inc (EXPE.O).

Uber's board of directors is split between detractors and supporters of former CEO Travis Kalanick
'Anyone would tell you this is highly unusual,' Uber CEO says of power struggle

Benchmark, which has a board seat, also had super voting shares in Uber and will see its control diminished along with Kalanick's. Allegations of sexual harassment spurred the company to hire former US Attorney General Eric Holder to investigate Uber's corporate culture.

Kalanick also cheered Tuesday's board vote, despite its intention to curtail some of his power.

Uber will also adopt a policy of one share, one vote, the people said.

"Today the Board came together collaboratively and took a major step forward in Uber's journey to becoming a world class public company", he wrote in a statement emailed by a spokesman. "Under Dara's leadership and with strong guidance from the Board, we should expect great things ahead for Uber", Kalanick said.

Furthermore, decisions taken in Uber's latest board meeting included the withdrawal of "supervoting rights" for some investors, meaning that from now on, all shareholders will have equal voting power.

On Tuesday, Khosrowshahi - who has apologized to Londoners for the firm's mistakes- will meet TfL's Commissioner Mike Brown in a bid to fix a fraught relationship between the regulator and the taxi app, which has prompted strong opposition from unions and traditional taxi drivers over working rights. CEO Ursula Burns, to Uber's board without consulting other directors.

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Other reports by TheSundaySentinel

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