Uber's investor sues ex-CEO Travis Kalanick for fraud, mismanagement
It looks like a bumpy ride ahead for Uber's Founder and ex-CEO Travis Kalanick who stepped down in June. Benchmark Capital, which owns 13% of Uber, has sued the ex-boss in Delaware Chancery Court for "misrepresentation, rupture of agreement and break of trustee obligation." Kalanick is accused of fraudulently planning his return as CEO by appointing his allies as board members. Know more!
Kalanick's spokesman says case is riddled with lies
In the lawsuit, Benchmark Capital alleged Kalanick sought to "entrench" himself on the company's board of directors in order to increase his power and control over Uber "for his own selfish ends". Benchmark is one of the first and major investors in Uber. However, Travis Kalanick's spokesman stated the lawsuit was "completely without merit and riddled with lies and false allegations."
Benchmark Capital's legal filing
"Kalanick's overarching objective is to pack Uber's Board with loyal allies in an effort to insulate his prior conduct from scrutiny and clear the path for his eventual return as CEO - all to the detriment of Uber's stockholders, employees, driver-partners, and customers."
Kalanick hasn't been sitting around idly after stepping down: Benchmark
The lawsuit filed by Benchmark revolves around Uber's last year's decision to increase the number of board seats to 11 from eight. It claimed Kalanick solely controls the three additional seats (his own and two vacant seats). Benchmark alleged Kalanick fraudulently got investors to agree to the additional seats and has been actively using them to thwart Uber's attempts to appoint his replacement.
How much control does Kalanick have over Uber?
Even after Kalanick was ousted as Uber's CEO, he still has significant control over the firm. He owns 10% of Uber's stock and 35% of common shares, giving him nearly 16% of the company's total voting power. Benchmark owns 13% of the stock but only 0.5% of common shares. However, Benchmark's voting power is 20%; so, it can outvote Kalanick.
Benchmark's demand
Benchmark Capital's lawsuit demands that the three additional Uber board seats, added by Kalanick in Jun'16 through fraud, be removed. If the lawsuit is successful, Kalanick, who currently holds only one seat, would be forced out of the company.
So, Kalanick won't be pulling a Steve Jobs
Uber Co-Founder Garrett Camp recently stated that Kalanick wouldn't be coming back as the CEO of Uber; he sent an email to employees, informing them the same. He was addressing reports about Kalanick telling friends that he was "Steve Jobs-ing" it back into his spot as the Uber CEO. The Uber board has reportedly narrowed its search for Kalanick's successor to four candidates.
