Uber board votes to pursue SoftBank deal, governance changes

Uber board votes to pursue SoftBank deal, governance changes

Uber board votes to pursue SoftBank deal, governance changes

Uber Technologies Inc.'s board has approved a series of corporate reforms along with a multibillion investment from SoftBank Group Inc. that are created to strengthen the ride-hailing company's governance while at the same time strip power from former Chief Executive Travis Kalanick.

The board's decisions mean that Uber, valued at almost $70 billion and closely watched by other start-ups, may have defused - at least temporarily - another fractious situation. United Kingdom judges are also deciding whether Uber needs to classify drivers as workers entitled to more benefits, a potentially significant shift for Uber's business. An Uber spokesperson called the power move "a complete surprise" on Friday, given the fact its former chief executive had controlled those seats but left them empty for more than a year, and that they are now at the center of a lawsuit from investor Benchmark Capital against Kalanick over alleged fraud.

The Uber board has decreased the room for Kalanick to control the company by a few ways.

Mr Kalanick, 41, was ejected by Uber after the publication this year of a critical report into claims of sexual harassment at the company.

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.

Furthermore, decisions taken in Uber's latest board meeting included the withdrawal of "supervoting rights" for some investors, meaning that from now on, all shareholders will have equal voting power.

The meeting will consider proposals to strip early investors of super-voting power and secure a multibillion-dollar investment.

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The new voting system adopted by the board is particularly damaging for Kalanick's influence: board members will now each have one vote per share, regardless of the class of shares they own.

The board of directors has been expanded to 17 members, up sharply from its current 11 member size.

Softbank has agreed to make an initial investment of between $1 billion and $1.25 billion in Uber, buying new shares to maintain the company's $69 billion valuation, the person familiar with the board's decision said.

Last week, Kalanick appointed two new members to Uber's board, former Xerox CEO Ursula Burns and former CIT Group CEO John Thain, a move that Khosrowshahi called "disappointing" and "highly unusual" as Kalanick didn't inform anyone of the move.

Dara Khosrowshahi flew in for talks with Mike Brown after the taxi app's licence to operate in the capital was withdrawn on public safety and security grounds. Though unlikely to make all the concessions sought by fellow board members, Kalanick has shown willingness to cut supervoting rights in the name of strengthening governance, one of the sources said.

Jo Bertram will leave Uber U.K.in the next few weeks to take up an undisclosed new role outside the company.

But the board didn't approve all proposed terms - for instance, changes that would have prevented Kalanick from regaining the CEO seat were dropped from the proposal before the meeting.

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