Former Uber CEO Travis Kalanick has appointed two new members to the company’s board of directors, an audacious power move that the company called “a complete surprise” and current CEO Dara Khosrowshahi called “disappointing.”
Ursula Burns, previously CEO of Xerox, and John Thain, previously CEO of Merrill Lynch, CIT Group and the NYSE, have been named Uber’s 10th and 11th directors, effective Friday.
“I am appointing these seats now in light of a recent board proposal to dramatically restructure the board and significantly alter the company’s voting rights,” Kalanick said in a statement issued to multiple outlets. “It is therefore essential that the full board be in place for proper deliberation to occur, especially with such experienced board members as Ursula and John.”
The dramatic move comes a little more than three months after Kalanick was pressured to resign by a group of investors including Benchmark, an early investor in Uber that recently sued Kalanick for fraud. That case has gone to private arbitration—i.e., out of the public spotlight—and much of the dispute centers on Kalanick’s three board seats.
Benchmark is also exploring legal options to challenge Kalanick over the new appointments, according to multiple reports.
?Kalanick, who remained on the company’s board following his resignation as CEO, was given control of three seats as part of a $3.5 billion investment from Saudi Arabia’s Public Investment Fund in June 2016. The year-plus for Uber since has been quite chaotic, with a massive investigation led by former US Attorney General Eric Holder into sexual harassment and workplace culture, along with an exodus of key executives.
Even as Uber has tried to move on from the drama, notably with the hire of Khosrowshahi from Expedia, it appears there is much more infighting to be had.
“The appointments of Ms. Burns and Mr. Thain to Uber’s board of directors came as a complete surprise to Uber and its board,” the company said in a statement. “That is precisely why we are working to put in place world-class governance to ensure that we are building a company every employee and shareholder can be proud of.”
In an internal email obtained by Recode, among others, Khosrowshahi called Kalanick’s appointments “disappointing” and revealed that Kalanick didn’t contact him or the board before making the appointments.
Former Uber board member David Plouffe weighed in on Twitter:
The timing of Kalanick’s actions, as he noted in his tweet, is tied to developments regarding a board meeting believed to be scheduled for Tuesday. The group is set to vote on a number of matters drafted by Goldman Sachs, according to Recode, The New York Times and many others. Issues on the table reportedly include:
- A new voting structure that would take away the outsized influence of early investors and employees with “super-voting shares.”
- An initiative that would require a former employee (e.g., Kalanick) to get a two-thirds vote from the board and shareholders to be named CEO.
- The future of Kalanick’s board seats (an early proposal reportedly involved granting one to SoftBank and another to an executive at a Fortune 100 company).
- Implementing a 2019 IPO deadline.
- The potential naming of an independent chairperson, which was a recommendation from the Holder Report.
- Expanding Khosrowshahi’s powers.
Another key development for the company relates to a SoftBank investment that could total $10 billion. Along with a total of two board seats, SoftBank is seeking to acquire a 17% to 22% stake in the company by purchasing shares from existing investors and directly investing at least $1 billion, according to The Wall Street Journal. The deal could reportedly come at a discount of at least 30% from Uber’s last valuation of nearly $70 billion.
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Related: Uber deemed ‘not fit and proper’ to operate in London
Article by Joshua Mayers, PitchBook
