Adnan Abidi / Reuters
Uber Technologies cofounder and former CEO Travis Kalanick announced that he appointed two new board members on Friday night in an unexpected move that may increase his power and sow more discord at the San Francisco-based ride-hailing company.
In a statement, Kalanick named former Xerox chairwoman and CEO Ursula Burns and former Merrill Lynch chairman and CEO John Thain to the board, which previously had nine members. Burns will be the third woman on the board, in addition to Nestlé executive vice president Wan Ling Martello and former media executive Arianna Huffington.
Kalanick's power to unilaterally name these two board members comes from a now-disputed decision from last year, in which the board granted him power to make three appointments as part of a $3.5 billion investment from a Saudi Arabia wealth fund. After he was removed as CEO in June, Kalanick named himself to one of the three seats and reserved the right to appoint the two other positions.
This decision comes as Uber and its investors are negotiating a multi-billion dollar deal with Japanese investment firm SoftBank and follows the company's appointment of Dara Khosrowshahi as its new CEO last month.
"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," Kalanick said in a statement. "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."
According to a source familiar with the situation, Benchmark Capital, a large shareholder and board seat holder, proposed a change in the company's voting structure earlier this week that would eliminate the super-voting power of shares held by early investors and executives like Kalanick. All shares, in the proposal, would carry equal weight in voting matters. The board discussed the matter on Thursday and is expected to vote on the proposal next week.
“The appointments of Ms. Burns and Mr. Thain to Uber’s Board of Directors came as a complete surprise to Uber and its Board," said an Uber spokesperson in a 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.”
Kalanick's move could be seen as a means of strengthening his position against Benchmark, which led the effort to oust him in June after employee complaints, press reports, and two internal investigations revealed sexual harassment, discrimination, and executive misbehavior at the company. Benchmark also sued Kalanick earlier this year for fraud and argued that his right to appoint new board members should be removed because he allegedly did not inform the board at the time of the issues at the company. Last month, a Delaware judge sent that lawsuit to arbitration.
A spokesperson for Benchmark did not immediately respond to a request for comment.
Kalanick had wanted to wait after the court case and arbitration to fill the two board seats, according to a person familiar with his thinking, but accelerated the process once Benchmark introduced its new voting proposal earlier this week and moved to vote on it next week. He had met with a handful of business executives over the last three months since Benchmark initiated its lawsuit just to be prepared to fill the seats if needed.
Though Kalanick had control over delegating the two seats, he was not allowed to use empty seats to cast board votes. That motivated him to go forward with appointing Burns and Thain, a move that that he discussed with some Uber board members in advance, according to the source.