Uber’s Board to Discuss Leave of Absence for Top Executive

2017-06-11 12:42:02

 

Uber’s Board to Discuss Leave of Absence for Top Executive

SAN FRANCISCO — Uber’s board of directors is meeting on Sunday morning to discuss a leave of absence for Travis Kalanick, the company’s chief executive, according to two people with knowledge of the matter.

Separately, the board members will also address the recommendations of Eric J. Holder’s monthslong investigation into the company’s culture, a deeply researched look backed by interviews with hundreds of employees. The meeting, which will be held in the Los Angeles offices of Covington and Burling, Mr. Holder’s law firm, is expected to last for a number of hours before the board makes any decisions on Mr. Holder’s recommendations. The two people requested anonymity because they were not authorized to speak for the company.

Uber has spent the better part of the last six months dealing with allegations of sexual harassment from current and former employees. Last week, it emerged that executives mishandled the medical records of a woman raped by an Uber driver. The comapny also admitted to using software to hide Uber drivers from the law.

In the weeks leading up to the meeting, Uber executives have vowed to reset the company. But skeptics of the company’s resolve to fix what even Mr. Kalanick says is broken are focused on one question: How far is Uber willing to go to change itself?

“Can they use this report as an opportunity to turn the corner?” asked Andrew Gilman, chief executive and founder of CommCore, a crisis communications firm. “Or is this just window dressing on the way to more bad behavior?”

It is a crucial moment for the ride-hailing company, which is privately valued at nearly $70 billion and operates in hundreds of cities around the world. Uber is fighting significant employee attrition, the tens of thousands of drivers it depends on are angry about their pay, and investors are concerned that one of the most well-funded start-ups in history has come unglued.

Adding to the concerns is the tricky structure of the San Francisco company’s board of directors, as well as Mr. Kalanick’s outsized voting power that, when aligned with board allies, essentially gives him the right to ignore any of the recommendations of the report prepared by a former United States attorney general, Eric H. Holder Jr.

Uber’s board follows a “founder-friendly” governance structure, made popular in Silicon Valley by Google and Facebook. Seven of Uber’s nine board members hold so-called super-voting shares, allowing them to have a stronger say in the board room. Four director seats are empty.

Because Mr. Kalanick and a handful of close allies hold a majority of these shares, the chief executive’s position has remained safe through months of controversy.

This hinges on the continued support of Garrett Camp, Uber’s co-founder and chairman, and Ryan Graves, a longtime employee and well-liked Uber executive who is a board member, according to five people familiar with the board’s internal workings who requested anonymity because they were not authorized to speak publicly. Both have super-voting rights. Other board members with super-voting shares, like Arianna Huffington, are also supportive of Mr. Kalanick.

J. William Gurley and David Bonderman, two venture capitalists and independent board members who also hold super-voting shares, are worried about the company’s management, these people said. Outside investors are also nervous about the string of scandals, and have called board members directly about their concerns.

All of the board members agree that significant changes are needed, but what those changes should be is the question.

Mr. Kalanick, through a spokesman, declined to comment. News of the meeting and Mr. Kalanick’s status was earlier reported by Reuters.

Employees and close watchers of the company worry that even the most damning conclusions of the Holder investigation could be ignored.

“Any response without complete buy-in from the top is a complete waste of time,” said Stephen Hirschfeld, an employment lawyer at Hirschfeld Kraemer who regularly investigates corporate harassment issues. “It can have an even worse impact on company morale if people already know it’s a total joke.”

Uber has long been known for its combative, raucous culture. The downside of that environment became clear in February when Susan Fowler, a former Uber engineer, wrote a lengthy public blog post detailing her history of sexual harassment and systemic issues with a dysfunctional human resources department.

The scandals kept coming. In March, the tech news site The Information reported that Mr. Kalanick and other executives attended an escort bar in South Korea with Uber employees, which later sparked a human resources complaint from an employee who was present.

Uber’s reputation became so bad that hiring managers in San Francisco were ordered to stop sending recruiting emails to potential candidates for a number of weeks, according to two people familiar with the matter. The company has since resumed recruiting efforts.

While management deals with the crises, Mr. Kalanick and other executives have already ignored some advice from top advisers.

Earlier this year, Uber’s general counsel and some board members advised that Emil Michael, Uber’s senior vice president of business and Mr. Kalanick’s close friend and strongest corporate ally, take leave from his position at the company until the results of the Holder report were delivered, according to three people familiar with the matter.

Mr. Michael, who has been at the center of three separate controversies at the company, refused to step down, and Mr. Kalanick did not force him to do so.

Executives, however, have begun to make changes in other parts of the company. Uber is dealing with more than 200 complaints from current and former employees, doling out warnings, mandatory workplace training or, in some cases, firing the worst offenders.

Last week, Uber announced it had terminated 20 employees over harassment, discrimination and other complaints uncovered in a separate internal investigation.

Uber hired Frances Frei, a well-regarded Harvard Business School management expert, to be its senior vice president of leadership and strategy and to tackle restructuring an organization that in just a few years has grown to more than 12,000 employees on several continents.

“My goal is to make this a world-class company that can be proud of itself in the end, rather than embarrassed,” Ms. Frei said in an interview with Recode.

The company also hired Bozoma Saint John, a former Apple executive, as its chief brand officer, a new position. She now has the task of repairing Uber’s deeply tarnished public image.

Mr. Kalanick is receiving management coaching from Joe Hubbard, an executive training director at Thrive Global, the company owned by Ms. Huffington, according to three people familiar with the arrangement. Uber and Ms. Huffington declined to comment.

Mr. Kalanick is also dealing with the sudden death of his mother, Bonnie Kalanick, in May, the result of a boating accident that also left his father seriously injured. The board meeting on Sunday is being held in Los Angeles because in the weeks since his mother’s death Mr. Kalanick has been spending time with family there, where he grew up.

The accident has complicated the timing and discussions around the investigation into Uber’s culture and leadership.

Still, some are concerned that for some of Uber’s executives, the rules do not seem apply.

Eric Alexander, Uber’s former vice president of business in Asia, who obtained the medical records of a woman raped by a driver in India, was not among the 20 employees terminated. The New York Times asked Uber in April about his handling of the investigation into the rape. Mr. Alexander was fired only after several other reporters began asking last week about his actions.

The solution, management consultants said, may be a companywide reset.

“To me, they don’t just need a culture change,” said Micah Alpern, a principal at A.T. Kearney, a top management and consulting firm. “They need to start from scratch to create a new culture entirely.”

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