Business & Tech

Uber’s directors ponder shaking up management

Travis Kalanick, 40, is cofounder and chief executive of Uber Technologies.

Udit Kulshrestha/Bloomberg News/File 2016

Travis Kalanick, 40, is cofounder and chief executive of Uber Technologies.

SAN FRANCISCO — Following reports that Uber executives turned a blind eye to sexual harassment and other corporate misbehavior, the company’s board on Sunday moved to shake up the leadership of the ride-hailing service, before the release this week of an investigation into its troubled culture.

Directors were weighing a three-month leave of absence for Travis Kalanick, the chief executive who built the startup into a nearly $70 billion entity, according to three people with knowledge of the board’s agenda. In addition, the board was discussing the possible departure of one of Kalanick’s top lieutenants, Emil Michael, said the people, who asked to remain anonymous because the discussions were confidential.

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The moves — if enacted — would scale back the involvement of Kalanick and strip him of an ally in the company he helped create, a turnabout for a chief executive who had been hailed as an innovator and role model. It would also plunge Uber, which has upended the transportation industry worldwide, into an uncertain period with no clear leader as competitors try to capitalize on the company’s woes.

Kalanick, 40, proposed the idea of taking time off, after a recent boating accident that killed his mother and sent his father to the hospital. Given those circumstances, Kalanick, who has worked nonstop since Uber’s founding in 2009, had told people he might need a break. Still, if he were to take a leave, it could be perceived as a repudiation of the aggressiveness that he has brought to Uber.

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Any reduction of his involvement would be significant, given that he molded the ride-hailing service in his own brash image. He has faced particular scrutiny in recent months as Uber has worked to overcome scandals, including employees detailing sexual harassment and attempts to evade law enforcement in some cities.

The discussions by the nine-member board came ahead of the release of a report on Tuesday by the former attorney general, Eric Holder, who was retained by Uber to investigate the company’s internal culture. In recent months, Uber has fired more than 20 employees for infractions including sexual harassment and discrimination.

“This starts at the very top,” 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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Uber declined to comment on the board meeting, held at Covington & Burling, the Los Angeles law firm where Holder works. Kalanick, through a spokesman, declined to comment. News of the meeting and talks on Kalanick’s status were earlier reported by Reuters.

The internal drama at Uber has gripped the broader technology industry, as the ride-hailing company has become emblematic of how startup culture can go awry. Yet even in Silicon Valley, where propriety can take a back seat to profits, the claims about Uber’s corporate culture have been startling, ranging from sexual harassment to the mishandling of the medical records of a woman raped by an Uber driver.

Uber’s current crisis stems from claims in February from a former engineer, Susan Fowler, that she had been routinely sexually harassed and that the human resources department had done little to help her. An outpouring of other cases followed, and Uber retained two law firms, including Covington & Burling, to investigate.

Uber has since faced other problems, including an intellectual property dispute over self-driving car technology with Waymo, the self-driving car business that operates under Google’s parent company. Uber also is dealing with a Justice Department investigations into tools that it used to evade law enforcement in cities where the authorities were trying to shut down its ride-hailing service.

Even so, Kalanick’s position has for months seemed secure, especially because of how the company is structured. 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 Kalanick and a few allies hold a majority of those shares, his position has been safe — and likely would remain so, even if he took a leave.

Some board members have expressed support for Kalanick. Garrett Camp and Ryan Graves, with Uber since its early days, have long believed Kalanick’s leadership was necessary to buck against an aggressive incumbent taxi industry. Arianna Huffington, founder of the Huffington Post and an Uber board member, has attested to his willingness to change.

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

Kalanick’s executive allies were in a trickier position. One recommendation in Holder’s report was that Michael, senior vice president of business and a confidant of Kalanick, be asked to leave the company, the three people said. The recommendations also include other sweeping changes at the company, and the board was expected to vote to accept the findings.

Michael has not resigned, nor has he been requested to do so, a person familiar with the matter said, but he is evaluating his options for the future.

This year, Uber’s general counsel and some board members advised that Michael take a leave until the results of the Holder report were delivered, according to three people familiar with the matter.

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

Michael did not respond to a request for comment.

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, a labor lawyer who investigates corporate harassment issues. “It can have an even worse impact on company morale if people already know it’s a total joke.”

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