Uber directors diminish clout of ex-CEO, set stage for ’19 IPO
After months of turmoil, Uber’s board on Tuesday unanimously agreed to change how the company is governed, diminishing former CEO Travis Kalanick’s influence while winning peace among feuding factions.
The 11 board members, who include Kalanick, also unanimously voted to move forward on a multibillion-dollar stock sale to Japanese conglomerate SoftBank and pursue a public offering on Wall Street by 2019, according to Bloomberg News.
“SoftBank’s interest is an incredible vote of confidence in Uber’s business and long-term potential,” the board said in a statement. SoftBank reportedly wants to invest $10 billion in the ride-hailing company, although it’s not a done deal.
Like many private tech companies, Uber has
issued so-called “super voting” shares which grant extra voting power to founders, investors and early employees. Kalanick held such shares, giving him outsize power on the board. The directors voted to switch to shares with equal voting power, a model commonly found in publicly traded companies.
The board also voted to increase its size to 17 people. Two of the new directors would be named by SoftBank, if that deal closes, while the other four would be independent, including an independent chair.
The board had nine members until Friday, when Kalanick unexpectedly appointed two new directors. Kalanick had persuaded the board last year to allow him to name three members; he had previously named himself to one of those seats. A series of scandals triggered a lawsuit this summer from major investor Benchmark, which alleged that Kalanick committed fraud in persuading investors to grant him those board seats.
Benchmark, which has a board seat, also had super voting shares in Uber and will see its control diminished along with Kalanick’s. The investor will drop the lawsuit against Kalanick if the SoftBank deal closes and the governance reforms take place, according to sources cited by Bloomberg.
The board set up incentives which will likely prompt Uber, the world’s most valuable startup at an estimated $69 billion, to conduct an initial public offering by fall 2019. Such an offering is likely to draw deep scrutiny and interest.
Kalanick was ousted in June after a string of scandals on his watch. Uber last month replaced him with Dara Khosrowshahi, the former CEO of Expedia.
The board’s actions are “a major step forward in Uber’s journey to becoming a world class public company,” Kalanick said in a statement. “We approved moving forward with the SoftBank transaction and reached unanimous agreement on a new governance framework that will serve Uber well. Under (Khosrowshahi’s) leadership and with strong guidance from the board, we should expect great things ahead for Uber.”
Bloomberg News contributed to this report.