Late on Friday, Sept. 29th, Uber’s CEO Dara Khosrowshahi and other high-ranking execs suddenly found themselves in a quandary over how the former chief executive Travis Kalanick appointed two new directors without telling anyone. The addition of the two directors, Ursula Burns and John Thain, former heads of Xerox and Merrill Lynch respectively, creates an 11 member board, and the possibility of giving Kalanick more capacity to control important rulings at Uber.
Khosrowshahi wrote in a document obtained by The New York Times that Kalanick’s actions were “disappointing,” and “anyone would tell you that this is highly unusual.” Kalanick’s actions stem from a proposal that Khosrowshahi and Uber shareholder Goldman Sachs presented to the board of directors on Thursday. The proposal, set for discussions on Tuesday, alters the power on Uber’s board and reduces Kalanick’s voting influence, thereby expanding Khosrowshahi’s power and imposing a 2019 deadline on the company to go public.
Obviously, the power grab forced Kalanick to affirm control once again, according to a statement that Kalanick issued on Friday. These actions put Uber back in the crosshairs of uncertainty during a time when the company is trying to distance itself from recent events by bringing on a new chief executive. Charles M. Elson, the director of the Weinberg Center for Corporate Governance at the University of Delaware, doesn’t mince words about Uber by claiming the company is copying certain things that demonstrate good governance at a public company. Also, referencing the proposal, he added that parts of it tend to show up with the existence of poor management, and usually get rejected by public shareholders.
Khosrowshahi and Goldman Sachs created a plan that started the last round of campaigning with the intention of selling billions of dollars of Uber stock to Softbank, a Japanese conglomerate. The outcome of the sale is uncertain due to due to stipulations from early Uber investors who claim they won’t sell to Softbank if Uber’s structure of governing remains unchanged and insists that it bars Kalanick from returning as chief executive.
At this time, it appears that the majority of Uber’s directors aren’t likely to buck the appointments of Burns and Thain due to a high likelihood they hold the potential to assist Uber with issues involving culture and diversity and to prepare it better to go public.