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Uber Investor Has Sued Former CEO Travis Kalanick
Benchmark Capital, an early investor in Uber, has sued former CEO Travis Kalanick for breach of contract and breach of fiduciary duty, Axios reports.
The venture capital firm filed its lawsuit in Delaware Chancery Court on Thursday.
Axios notes that Benchmark has a seat on Uber’s board and led the “shareholder revolt” that led to Kalanick’s ouster in June.
The suit revolves around the June 2016 decision to expand the size of Uber’s board of voting directors from eight to 11, with Kalanick having the sole right to designate those seats. Kalanick would later name himself to one of those seats following his resignation, since his prior board seat was reserved for the company’s CEO. The other two seats remain unfilled. Benchmark argues that it never would have granted Kalanick those three extra seats had it known about his “gross mismanagement and other misconduct at Uber” — which Benchmark claims included “pervasive gender discrimination and sexual harassment,” and the existence of confidential findings (a.k.a. The Stroz Report) that recently-acquired self-driving startup Otto had “allegedly harbored trade secrets stolen from a competitor.” Benchmark argues that this alleged nondisclosure of material information invalidates Benchmark’s vote to enlarge the board.
Benchmark is seeking to invalidate the June 2016 stockholder vote that would eliminate the three board seats, effectively removing Kalanick from Uber’s board of directors, according to Axios. Kalanick has a 10 percent equity stake in the $70 billion company, while Benchmark has a 13% stake.
Benchmark also argues that Kalanick had pledged in writing via his resignation agreement that the two empty board seats would remain independent and be subject to the entire board’s approval. However, Benchmark says in its complaint that “Kalanick has not been willing to codify those changes via an amended voting agreement,” Axios notes.
“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,” benchmark’s complaint states.
You can read the full complaint here.
Axios is also reporting that a group of shareholders are now seeking to boot Benchmark off the board because of its lawsuit. The shareholder group made its intentions known through “a petition-style email” that it sent on Friday morning, according to Axios.
The shareholders who signed the email include Shervin Pishevar of Sherpa Capital (who signed as an individual), Ron Burkle of Yucaipa Cos and Adam Leber of Maverick, Axios reports.
Garrett Camp, Uber co-founder and board member, told employees in an email this week that Kalanick would not be returning as CEO of the company.
Photo: JD Lasica