Category: board of directors

Actions and decisions of Uber’s Board of Directors

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Flawed sequencing in Khosrowshahi hiring, and generous compensation

Mike Isaac’s Super Pumped (p.389) reports that the public had learned that Uber’s board wanted Khosrowshahi as its next CEO — before he and the company had agreed on terms.  As a result, Khosrowshahi was in a particularly strong position to negotiate high payment.

Isaac reports that if Khosrowshahi was able to take Uber public by the end of 2019 at a valuation of $120 billion, he would be paid more than $100 million. But when Uber went public, its IPO price was $45 per share, and it sank as low as $22 in both 2020 and 2022.

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Kalanick attempted to name two new directors

Mike Isaac’s Super Pumped (p.388) reports that, in September 2017 (after being ousted as CEO), Travis Kalanick tried to stack the board with supporters. He relied on an amendment to Uber’s charter that allowed him to name two new directors. But at the same time, new investor SoftBank received six new directors.  With those new directors plus an end to Kalanick’s shares with ten-to-one preferred voting rights, Kalanick no longer had control.

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Investor Benchmark used controversial tactics to favor its preferred CEO candidate

Mike Isaac’s Super Pumped (p. 385) reports that during CEO selection discussions, board member and Benchmark partner Matt Cohler indicated that if the board voted for his firm’s preferred candidate (Meg Whitman), his firm would drop its lawsuit against Kalanick — a lawsuit which other board members perceived was harming the company.  Other board members felt this was “brinksmanship”, “holding the board hostage to approve the candidate of [Benchmark’s] choice” rather than seeking the best candidate on the merits.  Ultimately Cohler’s tactic failed, in that the next ballot brought a shift away from Whitman in favor of Khosrowshahi.

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Executive Leadership Team protested Kalanick’s communications

Mike Isaac’s Super Pumped (p. 369) reports Travis Kalanick continuing to meddle in Uber’s business — including demanding documents and trying to influence decisions — even after he resigned. Isaac presents a letter from all fourteen members of the Executive Leadership Team (which was temporarily running Uber after Kalanick’s departure):

Dear Board of Directors:

In fulfilling our obligation to surface issues we feel are significant, we call your attention to three examples:

1. Travis recently reached out directly to an employee, first asking if he would talk to a reporter about an upcoming negative story related to the Fawzi Kamel incident (Kamel was the driver in the March video). Previously, Travis’ personal lawyer had also reached out to this employee on the same topic.

Travis also requested that the employee produce private, internal emails for him, and said that if he refused to send them he would exercise his right as a board member to get them directly from the Security team. The employee did not produce the emails and Travis subsequently asked the Security team to produce the emails. The Security team also declined to produce the emails and reported the incident to Salle, who subsequently advised the ELT that we should stand firm against any requests that may violate an employee’s right of privacy, and that a Director on their own cannot conduct independent investigations.

Travis also asked whether the employee had spoken with the Covington investigators about the issue in question. The employee was very troubled by this given the confidential nature of the Covington process and reported his concerns to the Legal team.

2. Travis recently called an ELT member to ask if he could count on their votes (the particular purpose/vote was not identified). Current and former employees have reached out to the ELT with similar reports. This has put the ELT in a difficult position, wondering what Travis might be up to and whether or not it is a cause for concern.

3. Travis continues to reach out to employees beyond the ELT for business purposes. Regardless of the intention of the outreach, it is disruptive to the daily work at Uber. There is also cause for concern in that the outreach often comes with a request to conceal the conversation from management.

With deep respect,
The ELT

Isaac reports that all fourteen ELT members said they would resign if Kalanick continued trying to regain power.

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Investors asked Kalanick to resign

Mike Isaac’s Super Pumped (p. 344) reports that investors Benchmark, Fidelity, First Round, Lowercase Capital, Menlo Ventures, and others insisted that Travis Kalanick step down — or else they would go public with their request for his resignation, including giving the New York Times their letter requesting his resignation.

Investors’ letter to Kalanick:

Dear Travis:

On behalf of Benchmark, First Round, Lowercase Capital, Menlo Ventures, and others—which collectively owns more than 26% of Uber’s economic stock, and over 39% of Uber’s voting shares—we are writing to express our profound concerns about Uber’s direction and to propose a way forward.

Please know that we are deeply grateful for your vision and tireless efforts over the last eight years, which have created a company and an industry of which no one could have dreamed. Unfortunately, however, [the] series of recent revelations have deeply affected us. . . . [A]ll of these issues are causing tremendous damage to Uber’s brand and threaten to destroy Uber’s value for its shareholders and stakeholders. We believe the issues stem from deep–seated cultural and governance problems at Uber and from the tone at the top. . . . 

We must take concrete steps to address these issues and strengthen Uber’s brand and governance. If we do not adequately address these issues now, Uber’s brand and market share will continue to erode, to the detriment of the company and all of its shareholders, including you.

 . . . With these changes we firmly believe Uber can regain its place as one of the most important companies Silicon Valley has ever produced. We hope you will agree to move forward with us on this path.

“Moving Uber Forward”: Investor Demands

First, you must immediately and permanently resign as CEO. We strongly believe a change in leadership—coupled with effective Board oversight, governance improvements, and other immediate actions—is necessary for Uber to move forward. We need a trusted, experienced, and energetic new CEO who can help Uber navigate through its many current issues, and achieve its full potential.

Second, Uber’s current governance structures, including the composition and structure of the Board of Directors, are no longer appropriate for a $68 billion company with over 14,000 employees. The new CEO must report to an independent Board that will exercise appropriate oversight. . . . Further, as you know, the Holder Report calls for the appointment of additional independent Board members. To that end, you should fill two of the three Board seats you control (retaining one for yourself) with truly independent directors who comply with the Holder Report’s recommendations for qualification for service. . . . 

Third, . . . [y]ou should support a board led CEO search committee, with an independent chairperson, and the inclusion of a representative of senior management and a representative of the driver community. . . . 

Fourth, the company should immediately hire an adequately experienced interim or full–time Chief Financial Officer. The company has intentionally operated without a properly qualified executive in the top finance [role] for over two years. The investor group broadly believes that this specific executive hire needs to be addressed urgently.

We hope you will agree to move forward with us on this path, and look forward to your response.

Isaac reports Kalanick’s response:

“If this is the path you want to go down, things are gonna get ugly for you,” Kalanick said. “I mean it.”

In response, Kalanick called investors and Uber executives, seeking their support for a shareholder vote.  Finding limited support, Kalanick ultimately resigned.

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Board member mocked women talking at Uber all-hands

Mike Isaac’s Super Pumped (p. 331) reports tense discussions as Uber’s Board of Directors summarized the Holder Report and changes to Uber’s governance. After Arianna Huffington announced a woman joining Uber’s board, board member David Bonderman remarked “I’ll tell you what it shows. It’s that it’s much likelier to be more talking on the board.”  Isaac says “the room froze” and attendees perceived that “one of Uber’s board members [had] just made a sexist comment about women talking too much.”

Travis Kalanick, long in dispute with Bonderman, took this opportunity to have Bonderman removed from the Board. (Isaac p. 332-335)

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Victims of sexual assault, rape, harassment, and gender-motivated violence criticized Uber’s arbitration clause

Fourteen victims of sexual assault, rape, harassment, and gender-motivated violence criticized Uber’s arbitration clause, which prevented them from bringing lawsuits about the harm they suffered. Their letter to Uber’s Board of Directors asked that Uber remove (or agree not to enforce) its arbitration clause as to these complaints. They noted a California case in which Uber aggressively sought to force one of their complaints into confidential arbitration. They also noted pending legislation in the United States Congress and New York State Senate that would disallow companies from requiring victims of sexual harassment or assault to proceed in arbitration.

News coverage from The Mercury News and Recode.

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