February 22, 2018

Uber CEO Dara Khosrowshahi tackles challenges with board battle, London regulator

06 October 2017, 12:39 | Frank Carlson

Two rights at Uber in danger of making a wrong

Uber's boardroom warfare continues: Vote would further hobble Travis Kalanick

Today (Oct. 4) Uber announced in a statement it would move forward with a proposed investment from Japanese tech giant SoftBank which could close "in the coming weeks", and also voted in favor of a number of corporate governance reforms. 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.

Kalanick's appointments came ahead of the board's meetings to consider new rules of governance for the company that would change shareholder voting rights and potentially the structure of the board.

The billion dollar deal between Uber and SoftBank will involve expanding the board seats from 11 to 17, including three independent directors voted in by Uber's board and up to three seats for SoftBank.

"We're ready to go to trial now, and will be ready after this very brief continuance", Uber said.

It's not clear whether the board made a decision to strip the shares of their special voting power, or if the board devised a different method to "ensure equality among all shareholders", as it said in a statement provided to Business Insider on Tuesday.

Kabbee chief executive Justin Peters called for a limit on the proportion of minicab drivers overseen by one company if Uber does have its licence renewed.

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.

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Kalanick would give one of the three board seats he controls to SoftBank. Mr. Kalanick had outsize voting rights at the company under a certain class of Uber stock that he owns, and he controls three board seats under an amendment to the corporate charter that was passed previous year.

On Monday, two of Uber's prominent investors, Shervin Pishevar and Steve Russell, threatened to sue the company if the vote to eliminate the supplemental clout carried by the "Class B common shares" (which yield 10 times as much voting power as Class A shares), and preferred stock.

Chief Executive Officer Dara Khosrowshahi flew to London for a meeting Tuesday with Transport for London to try to salvage Uber's business in its largest European market. But during the meeting, Uber's board members voted to drop the special super-voting power of class B common shares and preferred shares - Uber's two stock categories.

"We approved moving forward with the Softbank transaction and reached unanimous agreement on a new governance framework that will serve Uber well", he said.

Uber has multiple avenues to appeal last month's decision by the City of London to revoke its licence to operate in the city.

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 auto unit of Google's parent company Alphabet.

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