The board has proposed re-tooling Uber’s governance structure to diminish the power of some shareholders.
(TNS) -- SAN FRANCISCO — Adding a new twist to ongoing drama at Uber, a group of prominent investors in the ride-hailing startup is threatening to sue if a contentious board vote Tuesday doesn’t go its way.
The deeply fractured board was gearing up to vote on a handful of measures that would, among other changes, further reduce ousted CEO Travis Kalanick’s power as a shareholder and make it harder for him to return as chief executive, according to multiple media reports. On Monday, a collection of shareholders upped the stakes by threatening to embroil the San Francisco company, worth nearly $70 billion, in yet another legal battle.
The board has proposed re-tooling Uber’s governance structure to diminish the power of some shareholders — Class B shareholders currently have 10-to-1 voting power, but that would change to one vote per share, said Los Angeles-based attorney Mark Geragos, who represents the group of shareholders, which includes outspoken investor Shervin Pishevar.
The board also has proposed other changes, including some designed to rein in Kalanick. The proposal would make it harder for Kalanick to return to the company’s helm, impose a 2019 deadline for an Uber IPO, and make it harder for one person to take over the board, according to The New York Times.
“We are writing in advance of Tuesday’s ill-advised vote to avoid irreversible and cataclysmic damage to the company which would result from your agreement, tacit or otherwise to the proposal,” Geragos wrote in a letter sent Monday to Kalanick, early employee Ryan Graves and co-founder Garrett Camp.
Uber declined to comment on the letter Monday.
This latest wave of drama started late Friday, when Kalanick — kicked out by investors in June — made a surprise announcement. The ousted executive said he had appointed two new members to Uber’s board: former Xerox CEO Ursula Burns and former Merrill Lynch CEO John Thain. The move was seen as a slap in the face to the rest of the ride-hailing company’s executives and board, who apparently weren’t consulted before the decision was made.
“The appointments of Ms. Burns and Mr. Thain to Uber’s Board of Directors came as a complete surprise to Uber and its Board,” a company spokesman wrote in an emailed 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.”
It also was a blow to Uber’s new chief executive, Dara Khosrowshahi.
The new CEO called the move by his predecessor “disappointing” in an internal email to employees, Bloomberg reported. He wrote: “Travis appointed two new members to Uber’s Board without discussing it with me or the Board of Directors more broadly. Anyone would tell you that this is highly unusual.”
In a statement emailed to The Mercury News organization by his spokesman, Kalanick wrote it was important to appoint the new board members when he did.
“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,” he wrote. “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.”
“I am confident that, with their additions and Dara’s appointment,” he continued, “Uber will be well situated to focus on the future and continue to revolutionize how cities move.”
Burns was CEO of Xerox from 2009 to 2016, and now serves on the board of American Express, Exxon Mobile, Nestle and Datto. Former President Barack Obama appointed her to help lead the White House’s science, technology, engineering and math (STEM) program from 2009 through 2016.
Thain was CEO of Merrill Lynch until its $50 billion sale to Bank of America in 2008. After that, he served as CEO of CIT Group from 2010 to 2016.
Meanwhile, Kalanick is fighting a lawsuit brought by his high-profile investors at Benchmark, who are attempting to kick him off the board. That suit is proceeding in private arbitration after a judge removed it from open court.
Another group of investors sued the company last month, claiming a series of scandals that have beset the company — including sexual harassment allegations, federal probes and a legal battle with rival Waymo — have lowered Uber’s value and harmed investors.
©2017 The Mercury News (San Jose, Calif.) Distributed by Tribune Content Agency, LLC.