Uber Technologies\u00a0 will move forward with a major investment deal from SoftBank Group and approved a slate of governance reforms that will limit the influence of co-founder Travis Kalanick and early backers.<\/p>\n
The 11-person board voted unanimously Tuesday to approve sweeping changes to the company\u2019s power structure, the San Francisco-based company said. The plan would expand the size of the board to 17 seats, people familiar with the matter said.<\/p>\n
The unusually large board would accommodate two spots for SoftBank representatives and more independent voices. The SoftBank deal isn\u2019t yet finalized, but board approval represents a major step.<\/p>\n
SoftBank will invest $1 billion to $1.25 billion in Uber at last year\u2019s valuation of about $70 billion, said the people,\u00a0who asked not to be identified because the details are private.<\/p>\n
The Japanese technology conglomerate will spend billions more, alongside\u00a0 Dragoneer Investment Group and General Atlantic, on stock from shareholders to acquire roughly 14% to 17% of the ride-hailing company.<\/p>\n
Uber said in an emailed statement that it expects to finalize the SoftBank deal \u201cin the coming weeks.\u201d<\/p>\n
Uber will also adopt a policy of one share, one vote, the people said. Kalanick, the controversial former chief executive officer, and venture capital firm Benchmark, the largest shareholder, were among those with outsize voting power before the latest changes.<\/p>\n
The board also set a deadline for the closely held company to go public in the next two years, the people said. If it doesn\u2019t, Uber will lift some restrictions on shareholders from selling their stakes.<\/p>\n
The agreement is a major victory for Uber\u2019s new CEO, Dara Khosrowshahi, who is in London after meeting with taxi regulators there to appeal a looming citywide ban.<\/p>\n
Khosrowshahi was taken by surprise on Friday when Kalanick appointed two corporate titans – former Merrill Lynch CEO John Thain and former Xerox Corp.<\/p>\n
CEO Ursula Burns – to the board with little notice. But Khosrowshahi was able to bring directors together to push through changes that limit Kalanick\u2019s influence.<\/p>\n
It has been a rough 2017 for the global ride-hailing giant. Allegations of sexual harassment spurred the company to hire former US Attorney General Eric Holder to investigate Uber\u2019s corporate culture.<\/p>\n
The company lost many of its top executives and faced worldwide political protests. And all of that backlash only emboldened its global competitors.<\/p>\n
Kalanick, in an emailed statement, described the changes as \u201ca major step forward in Uber\u2019s journey to becoming a world-class public company.\u201d He will keep his board seat, as will Thain and Burns. Benchmark declined to comment.<\/p>\n
The moves are expected to end a legal fight between Kalanick and Benchmark. The venture capital firm agreed to drop its case against Kalanick, now in arbitration,\u00a0if the SoftBank deal closes and the governance changes are fully adopted, two people familiar with the matter said.<\/p>\n
The reforms are also contingent on the deal going through.<\/p>\n
Uber\u2019s enormous board is a bit of an unhappy compromise. Rather than take a seat from any existing board members as\u00a0Khosrowshahi had previously considered, Uber added three spots for independent directors, plus another for an independent chair, and two more for SoftBank.<\/p>\n
It will make the board more than twice as large as the average private company and bigger than most public firms, according to the National Association of Corporate Directors, a trade group.<\/p>\n
Many of the changes have the effect of restricting Kalanick\u2019s role at the company, while not specifically targeting him.<\/p>\n
Kalanick, along with other former and current employees, is barred from chairing the board\u2019s committees or subcommittees under the new rules, according to a person familiar with the matter.<\/p>\n
That provision also applies to Khosrowshahi.<\/p>\n
Any new CEO – until 18 months afters Uber\u2019s IPO – would need two-thirds of board votes, a person familiar with the matter said. If any former Uber executive became CEO, some transfer restrictions would go away, allowing investors to sell.<\/p>\n
Effectively that would mean that if Kalanick ever became CEO again, Benchmark would be able to sell its shares.<\/p>\n
Kalanick will, however, have a role selecting the new independent directors – as will Benchmark. Those directors still must be approved by a majority of the full board or a majority of shareholders.<\/p>\n
The last time Uber\u2019s board went into such heated deliberations, it was weighing two high-profile candidates to replace Kalanick as CEO: General Electric Co\u2019s Jeffrey Immelt or Hewlett Packard Enterprise\u2019s Meg Whitman.<\/p>\n
Instead, the board opted for a surprise pick in Expedia Inc.\u2019s Khosrowshahi. This time, Khosrowshahi made sure there weren\u2019t any big surprises.<\/p>\n