Thursday, September 20, 2018
Business

Uber weighs leave of absence for top executive

SAN FRANCISCO — 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 startup 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 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 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.

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 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. 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 in some cities.

The discussions by the nine-member board preceded a report from 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 Holder works. 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 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, 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 investigation 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, 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 would most likely would remain so, even if he took a leave.

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."

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