Uber Board Votes to Change Company's Power Structure

Dianna Christensen
October 6, 2017

Uber Technologies directors plan to vote Tuesday on board reforms and whether to pursue a major stock deal with SoftBank Group despite the surprise appointment of two new members by ousted CEO Travis Kalanick, two people familiar with the matter said.

Looking positively to the future of the company and its investment, Uber said: "SoftBank's interest is an incredible vote of confidence in Uber's business and long-term potential, and we look forward to finalizing the investment in the coming weeks". Kalanick and another early investor, venture fund Benchmark Capital, are engaged in a bitter legal battle over his role at the company.

The board has proposed re-tooling Uber's governance structure to diminish the power of some shareholders - Class B shareholders now 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 of directors has been expanded to 17 members, up sharply from its current 11 member size. In London, Uber says it has more than 40,000 drivers and more than 3.5 million riders who use the app at least once every 90 days.

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

The governance proposal, written with the help of Goldman Sachs Group Inc., would shift Uber shareholders to one share, one vote.

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On Friday, Kalanick responded by filling two vacant board seats with Burns, the former Xerox CEO and Thain, the former CEO of Merrill Lynch CEO. "However, then Khosrowshahi would have to make sure Uber does change, which might be a tall order". Allegations of sexual harassment spurred the company to hire former US Attorney General Eric Holder to investigate Uber's corporate culture. Top Uber investors Steve Russell and Shervin Pishevar threatened a lawsuit following the decision, which would remove the tenfold voting power of their Class B common shares compared to regular Class A shares held by other investors.

Any former officer of the company would require two-thirds vote of support from shareholders and the board.

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.

The meeting will consider proposals to strip early investors of super-voting power and secure a multibillion-dollar investment. "Under Dara's leadership and with strong guidance from the board, we should expect great things ahead for Uber".

Uber said the meeting between its CEO Dara Khosrowshahi and Transport for London (TfL) commissioner Mike Brown was designed "to make things right", 11 days after the body ruled against the U.S. company.

Uber representatives were also in a San Francisco federal court on Tuesday for a decision in an on-going legal battle over trade secrets with Waymo, the self-driving vehicle unit of Google's parent company Alphabet.

Other reports by GlobalViralNews

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