Five weeks after Travis Kalanick’s surprise resignation as chief executive of Uber Technologies
Inc., the board of the now-leaderless company is wrestling with a thorny question.
Should it negotiate with SoftBank Group Corp.
, which has in recent weeks approached Uber with a multi-billion-dollar investment offer that could alter the course of the ride-sharing powerhouse? Or should it wait until after it hires a new chief executive to consider the offer?
The puzzle points up the delicate situation Uber’s eight-member board is in as it rushes to find a chief executive to head a depleted executive suite and help navigate a litany of legal challenges, fierce competition and a contentious investor base angling to preserve the company’s nearly $70 billion valuation.
On Thursday, Uber’s board met to discuss chief executive candidates and the offer from the Japanese tech giant, a potential deal that ultimately could affect the recruiting. Uber has set a Labor Day deadline to name a new chief executive, but the board faces an unprecedented array of obstacles, uninvolved recruiters say. The board is also trying to find an independent chairman to replace the incumbent, Garrett Camp, an Uber co-founder who is expected to remain a director. At the same time, the board is integrating three new directors, all of whom serve on its five-member chief executive search committee.
And Mr. Kalanick, known for his tight grip on the company that he co-founded, sits on the board’s search committee, something of a rarity. It is unusual for an ousted chief executive to serve on the board committee seeking a replacement, according to Margot McShane, a managing director in the San Francisco office of executive-search firm Russell Reynolds Associates Inc.
Meanwhile, Uber’s board is still contending with the fallout of an internal investigation into allegations of sexism and sexual harassment and a list of 47 proposed reforms from former US. Attorney General Eric Holder, whose law firm oversaw the months-long probe.
Some people who have been approached about the chief executive job and some investors said the search process seemed haphazard, particularly in the early stages when Uber hadn’t taken certain steps. For example, it was slow to create a detailed multi-page job description, known as a “spec.” Board members and investors also sought out candidates on their own, leading to an occasionally scattershot approach. An Uber spokesman declined to comment.
Uber lost one big-name prospect Thursday when Hewlett Packard Enterprise Co. Chief Executive Meg Whitman said on her Twitter account she wouldn’t be leaving to take the job. General Electric Co. Chief Executive Jeff Immelt has met with Uber and expressed interest in the job, according to people familiar with the matter.
Mr Immelt’s fellow directors may raise questions about his Uber flirtation during a GE board meeting Friday. He relinquishes his chief executive role at the end of the month but remains chairman through year-end. Others who had been approached for the job early on include John Donahoe, the former head of eBay Inc., and Thomas Staggs, the former Walt Disney Co. chief operating officer, according to people familiar with the matter.
Some investors privately said they were disappointed Ms Whitman ruled herself out, viewing her as the most qualified of the candidates on Uber’s short list. Several investors said they believe it was the result of a divide developing on the board, with some directors, including media magnate Arianna Huffington, seeking a leader in the mold of Mr. Kalanick, while the newer board members angle for a chief executive who will set a different course.
In the weeks before he was pushed out, Mr Kalanick frustrated some investors by blackballing numerous candidates for the position of chief operating officer before that search was suspended in June after about three months, according to people familiar with the matter. He and the other search-committee members each get one vote, and Uber’s board is striving for a unanimous decision though it isn’t necessary, said a person familiar with the matter.
A strong chief executive prospect might balk at taking Uber’s top job without unanimous board support. SoftBank, which shares a board member with Uber in Yasir Al Rumayyan, head of Saudi Arabia’s sovereign-wealth fund, approached the San Francisco company in recent weeks with a possible multibillion investment offer.
A massive capital injection would help a new chief executive sustain the company’s breakneck growth, which led to losses of more than $3 billion last year.
But Uber isn’t exactly in need of a big capital infusion with some $7 billion in cash on hand, and recently it has shown signs it could retreat from fiercely competitive markets. It did so this month in Russia when it combined its operations with Yandex.Taxi, and last year in China in joining with Didi Chuxing Technology Co.
SoftBank is a big investor in three of Uber’s Asian rivals, including Singapore’s GrabTaxi Holdings Pte., which some investors view as a likely merger candidate for Uber in Southeast Asia.
Uber’s accelerated search timeline of about 2½ months—chief executive searches typically run about three to six months—befits a company that embraced the Silicon Valley ethos to “move fast and break things” in becoming the world’s most highly valued private company. But Uber faces challenges including repairing the company’s tarnished reputation after a series of scandals this year and a continuing lawsuit over what rival Alphabet Inc. alleges was the theft of self-driving car trade secrets.
“They’re in desperate need of a culture change and that’s a big deal,” said Steve Nilsen, a partner at executive search firm Boyden.
Source: The Wall Street Journal