Stakes: Per the complaint, Kalanick currently holds around a 10% equity stake in Uber, which most recently was valued at around $70 billion. Benchmark holds approximately 13 percent.
This is interesting. I thought HNers were saying Kalanick had the biggest stake, which is why the board couldn't fire him.
How does this work? If someone only has 10% equity, why was it so difficult to remove them? This is a useful tool for founders, so it's worth understanding.
Even if a worker sells only 10 percent of his or her stock back to the company, that worker agrees to give Mr. Kalanick the voting rights to 100 percent of his or her stock. Each share of Class A stock comes with one shareholder vote, while each share of Class B comes with 10 votes.
Uber had 545.8 million Class A shares at the end of last year, which included 43.4 million employee stock options that had been issued, according to financial statements obtained by The Times. If all of the early employees who owned those options sold even a small part of their stock to Uber, Mr. Kalanick could control the votes of up to 43.4 million shares, or an additional 7.9 percent of that stock class.
Uber also had 459.7 million Class B common shares at the end of 2016, which included 9.9 million employee stock options that had been issued. If all of the holders of those options sold even part of their stock to Uber, Mr. Kalanick could control the votes of up to 9.9 million shares, or an additional 2.2 percent of that stock class.
Mr. Kalanick does not control those votes until he issues something called a “voting notice,” which requires the employee to vote all of his or her remaining stock in accordance with Mr. Kalanick’s wishes on all matters submitted to a vote of stockholders, according to the agreement. If Mr. Kalanick issued such a notice to a Class B shareholder, the stock gets only one vote a share, which goes to Mr. Kalanick.
> Employees must follow the “instructions of Travis Kalanick,” according to the buyback agreement, “with respect to any and all matters” that are submitted to a shareholder vote.
Wow. I knew about the super-shares, but giving Travis (not even Uber's CEO but Travis personally!) control over the voting rights of any employee who sells any of their stock back to the company seems pretty fucked up. Is this done at any other company?
Uber has multiple classes of stock and Kalanick successfully negotiated retaining most of the voting rights. VCs won't put up with those shenanigans for must investments but they occasionally make exceptions for unicorns due to FOMO.
This is interesting. I thought HNers were saying Kalanick had the biggest stake, which is why the board couldn't fire him.
How does this work? If someone only has 10% equity, why was it so difficult to remove them? This is a useful tool for founders, so it's worth understanding.