Uber Weighs Leave of Absence for Chief Executive
Facing accusations that Uber executives turned a blind eye to sexual harassment and other corporate misbehavior, the ride-hailing service’s board moved on Sunday to shake up the company’s leadership, ahead of the release this week of an investigation’s findings on its troubled culture.
Uber directors were weighing a three-month leave of absence for Travis Kalanick, the chief executive who built the start-up into a nearly $70 billion entity, according to three people with knowledge of the board’s agenda.
In addition, a representative for Uber’s board said the directors “unanimously voted” to adopt all of the recommendations made in a report by the former attorney general Eric H. Holder Jr., who was retained to investigate the company’s culture. One of the recommendations included the departure of a top lieutenant to Mr. Kalanick, Emil Michael, said the people, who spoke on the condition of anonymity because the discussions were confidential.
The moves would scale back the involvement of Mr. Kalanick and strip him of an ally, a turnabout for a chief executive who had been hailed as an innovator and a role model. The changes would also further destabilize the leadership at Uber, which has upended the transportation industry worldwide, at a time when rivals are trying to capitalize on the company’s woes.
Mr. Kalanick, 40, proposed the idea of taking time off after a boating accident last month that killed his mother and sent his father to the hospital. Given those circumstances, Mr. 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 leave, it could be perceived as a repudiation of the aggressiveness that he has brought to Uber.
Any reduction of his involvement in Uber — even if temporary — would be significant, given that he molded the ride-hailing service in his own brash image. Mr. Kalanick has faced particular scrutiny in recent months as Uber has worked to overcome scandals, including employees detailing sexual harassment and systematic attempts to evade law enforcement personnel in some cities.
The discussions by the nine-member board preceded a report from Mr. Holder’s investigation, scheduled to be released on Tuesday. 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.”
Uber declined to comment on the company discussions, which were held at the Los Angeles offices of Covington & Burling, the law firm where Mr. Holder works. Mr. Kalanick, through a spokesman, declined to comment. News of the discussions was previously reported by Reuters.
The internal drama at Uber has gripped the broader technology industry, as the ride-hailing company has come to symbolize how start-up 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, including widespread sexual harassment and 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 when she worked at the company and that the human resources department had done little to help her. An outpouring of other cases followed, and Uber retained at least two law firms — including Covington & Burling — to look into the matters.
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 personnel in cities where the authorities were trying to shut down its ride-hailing service. Many executives have left the company in recent months.
Even so, Mr. 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 Mr. Kalanick and a few allies hold a majority of those shares, his position has been safe — and would most likely remain so, even if he took a leave.
Some Uber board members have expressed support for Mr. Kalanick. Garrett Camp and Ryan Graves, who have been with Uber since its early days, have long believed that Mr. Kalanick’s leadership was necessary to buck against an aggressive incumbent taxi industry. Arianna Huffington, the founder of the Huffington Post who is also an Uber board member, has publicly attested to Mr. Kalanick’s 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.
Mr. Kalanick’s executive allies were in a trickier position. One of the recommendations in Mr. Holder’s report was that Mr. Michael, Uber’s senior vice president of business and a close confidant of Mr. Kalanick’s, be asked to leave the company, according to the three people. The firm’s recommendations also include other sweeping changes at the company.
Mr. Michael has not resigned, nor has he been asked to do so, according to a person familiar with the matter, but he was evaluating his options.
This year, Uber’s general counsel and some board members recommended that Mr. Michael 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 controversies at Uber, refused to step down, and Mr. Kalanick did not force him to do so.
Mr. 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 partner at the labor law firm 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.”