Divided Uber board reaches peace with Softbank Group
GOVERNANCE DEAL Shareholders trim power of former chief Travis Kalanick
SANFRANCISCO: Uber Technologies Inc.’s fractured board declared peace on Tuesday, attempting to put months of strife behind it by unanimously passing a series of measures to shore up corporate governance, bring in major investor Softbank and diminish the power of former chief executive Travis Kalanick.
The agreement could shore up Uber’s reputation after a series of scandals and a legal battle between Kalanick and an Uber investor group led by Silicon Valley’s Benchmark Capital.
The deal could be subject to a lawsuit and is contingent on the multi-billion dollar investment by Japan’s Softbank Group Corp. closing in the coming weeks.
The terms preserve Uber’s $69-billion valuation, highest among the world’s venturebacked start-ups, as Softbank and others invest about $10 billion. “Softbank’s interest is an incredible vote of confidence in Uber’s business and long-term potential,” the board said in a statement.
Benchmark General Partner Bill Gurley, who was replaced by a colleague on Uber’s board in June, said by email, “It was a good day for Uber, a good day for Uber’s employees, and good day for Uber’s new CEO.”
Kalanick described Tuesday’s actions as “a major step forward in Uber’s journey to becoming a world class public company.”
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.
Governance policies adopted by the board would make it difficult for Kalanick to return as CEO. He resigned in June under pressure from the Benchmarkled investor group over employee sexual harassment investigations, a trade-secrets misappropriation lawsuit by Waymo and efforts to interfere with government probes.
A two-thirds majority vote of the board would be required to hire a replacement for Khosrowshahi before the San Francisco startup holds an initial public offering, according to a person familiar with the matter.
The board set a deadline for an IPO of autumn 2019, the person added.
Uber’s board will expand from 11 directors, including a pair of Kalanick appointees seated on Monday, to 17 directors, the person cited above and another person familiar with the matter, said.
The increase would include four new independent directors for a total of seven. Five board seats would go to company insiders or co-founders, and five would be representatives of investors. The chairperson would be one of the independent directors.
Two of the six new seats would go to Softbank, the people said. The other four would be selected by a nominating committee of the board. Kalanick and other early shareholders also are sacrificing voting power, as Uber adopts a one-vote-per-share policy, the people added.
Early Uber investors Shervin Pishevar and Steve Russell said in a statement after Tuesday’s vote that they would sue to block the change, which cuts the supervoting rights that give them 10 votes per share. If successful, such a lawsuit could threaten the other terms of the boardroom compromise.
For Kalanick, agreeing to drop his voting power could enable him to resolve his dispute with Benchmark.
The changes decided Tuesday would prompt Benchmark to end a lawsuit and arbitration proceedings against Kalanick, the two sources and another said.