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Uber CEO ouster just latest in long line of history investor mutinies USA News Today

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Uber CEO ouster just latest in long line of history investor mutinies USA News Today

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Uber CEO Travis Kalanick has resigned. His successor will have to manage a myriad of troubles for the company.
USA TODAY

Uber CEO Travis Kalanick’s resignation is only the latest example of investors enforcing their will on a troubled company.

Kalanick, 40, who co-founded Uber in 2009, announced late Tuesday he would step down after receiving a letter entitled “Moving Uber Forward,” from some the company’s largest investors, a development first reported by The New York Times.

Those investors, perhaps rattled by a threat to Uber’s whopping $70 billion valuation, seek to move forward from several months engulfed in a burgeoning crisis. A three-month internal investigation, urged tighter oversight of Uber’s board and management, as well as other changes. The company began the probe after a former Uber engineer, Susan Fowler, authored a blog post in which she described the workplace as one that failed to act on complaints of sexual harassment.

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And there was plenty more to raise questions about company leadership: its Greyball technology that sent a fake app to regulators who might be investigating the company’s activity, prompting a federal investigation, and a lawsuit from Google self-driving car company Waymo over allegations  its former Uber’s head of self-driving tech stole trade secrets.

“We have seen, time and time again, that investors, constituents and employees in the corporation, period … want to be associated with something that is of high integrity and that has great moral value,” said Jesse Calloway, author of All The Way to The Top: A Practical Guide for Corporate and Business Leadership and president of Leadership & Motivation Consultants in Chesterfield, Va. “You want the return, don’t get me wrong, because you are investing, but you also want to feel good about it at night.”

An investor “mutiny” may occur long before an official finding of wrongdoing, out of concern for a company’s integrity and reputation, Calloway says.

Some previous examples of investor mutinies:

APPLE

Steve Jobs lost a power struggle in 1985 with the company’s board and then-CEO John Sculley, which resulted in him losing control of the Macintosh group. He left the company but returned a decade later.

DISNEY

In 2005, then-CEO Michael Eisner, who had lost his chairmanship of the company the previous year, stepped down after shareholders and former board members Roy Disney and Stanley Gold led an anti-Eisner rally amid a hostile takeover attempt by Comcast. They then supported the ascension of Bob Iger as CEO and Disney rejoined the board.

TIME WARNER

Six years after AOL’s $165 billion deal in 2000 to acquire Time Warner, Carl Icahn engineered the breakup of the merger. New board members were elected, Time Warner would repurchase billions of its stock and cost-cutting initiatives were implemented. Richard Parsons remained as CEO but had to make concessions to Icahn.

YAHOO

Hedge fund Starboard Value and other activist investors pressured Yahoo’s board to explore a sale last year after the company opted not to spin off of its stake in Chinese e-commerce company Alibaba, valued at about $29 billion at the time. Some activists were even more pointed: They wanted CEO Marissa Mayer, who was brought on from Google to engineer a turnaround, out.

After Starboard threatened a proxy fight, Yahoo reached a deal to add four independent directors to its board including Starboard CEO Jeff Smith. In July 2016, Verizon won a bidding war, agreeing to acquire Yahoo for $4.8 billion, a deal which closed earlier this month. (Verizon paid about $4.48 billion, as result of a discount after two massive data breaches were disclosed at Yahoo.) Mayer resigned when the Verizon deal closed.

It’s more rare to see an investor mutiny play out among private companies, whose ownership is closely held by venture capitalists and often, founders.

When activist investors take action in public companies, “the share price becomes the trigger,” said Reena Aggarwal, a corporate governance expert and professor at Georgetown University’s McDonough School of Business.

Investor activism within a privately-held company like Uber is unique, she says. “These investors are just looking forward and thinking about, ‘How does Uber get to its next phase?'”

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Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.

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Uber CEO ouster just latest in long line of history investor mutinies USA News Today

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