Uber board approves governance changes, limits Travis Kalanick's influence

Lucy Hill
October 6, 2017

Uber's board of directors has unanimously voted to move forward with a proposed investment by SoftBank and Dragoneer Investment Group. Kalanick was forced to resign as CEO in June after a series of missteps, including the controversy surrounding the company's use of "Greyball" software, which helped drivers avoid controls and accusations of sexual harassment. Mr. Kalanick holds about a third of Uber's class B common stock, which originally came with 10-to-one voting power.

"Today's action by the board was the culmination of a blatant bait and switch, essentially robbing loyal employees, including the more than 200 early founding Uber employees and advisors, of their hard earned shareholder rights", Pishevar and Russell said.

Among the approved proposals Tuesday, Uber's board agreed to revoke certain investors of their so-called supervoting rights, which granted them multiple votes per share, a person familiar with the matter said.

As Uber's Dara Khosrowshahi lobbied officials in London to reverse a citywide ban, the new chief executive officer also had his attention on a different kind of politics at headquarters. One being expanding the board of directors in the company from 11 now to 17 directors.

Uber has disputed the regulator's specific findings, but acknowledged it pushed the limits with its business practices.

While Uber's board was able to reach an agreement today, enabling it to move forward with a key SoftBank investment, the chaos surrounding the company is far from finished. Again, he appointed Burns and Thain as new board directors in an attempt to have more advantage in the board.

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John Colley, of Warwick Business School, professor of Practice in the Strategy and International Business group has commented: "Uber has a major cultural problem which has been found to be sexist, macho and lacks concern for regulation of nearly any sort".

Those governance changes include expanding the board from 11 to 17 members, limiting shareholders to one vote per share (thereby cutting some of Kalanick's voting power) and setting a deadline for Uber to go public in two years, Bloomberg reported.

The moves are expected to end a legal fight between Kalanick and Benchmark.

Last week, Khosrowshahi and Goldman Sachs (an Uber investor) brought the board a proposal. It will make the board more than twice as large as the average private company and bigger than most public firms, according to the National Association of Corporate Directors, a trade group.

Tensions appeared to subside in August with the appointment of Khosrowshahi, former boss of the global travel giant Expedia, as the new Uber head. Those directors still must be approved by a majority of the full board or a majority of shareholders.

Governance policies adopted by the board would make it hard for Kalanick to return as CEO.

Other reports by TheDailyFarc

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