Uber investors seek to oust Benchmark after 'destructive' lawsuit

2017 Mini Countryman Front Right Quarter
Benchmark Seeks Kalanick's Uber Board Ouster, Damages

12 August, 2017

The well-regarded venture firm was an early investor in and said in the lawsuit that it owns 13 per cent of and controls 20 per cent of the voting power.

While asked to comment on the statement, Benchmark Capital and Uber declined.

Bill Gurley, the venture capitalist who led Benchmark's investment into Uber, was once a mentor to Kalanick and one of his closest confidants.

While Benchmark's voting power nominally gives it the clout to outvote Kalanick, Kalanick now controls three out of 11 board seats, his own and two vacant seats. Benchmark's lawsuit alleged that Kalanick was scheming to regain power by attempting to "pack the board".

The lawsuit also says Kalanick didn't discuss his failure to curb Uber's pervasive culture of discrimination and sexual harassment. These scandals have led to halting of the Uber's self-driving auto after the engineer at the center of its development left the company.

The current lawsuit was filed in a DE court on Thursday 10 August 2017.

Investors Shervin Pishevar of Sherpa Capital, Ron Burkle of Yucaipa Companies and Adam Leber, an angel investor who works for music company Maverick, signed the email and said Benchmark's lawsuit harms Uber Technologies Inc's valuation, interferes with fundraising efforts and impedes the company's search for a new CEO to replace Kalanick, according to the email sent to shareholders and board members. The lawsuit accuses Kalanick of knowingly misleading the board to agreeing to increase the board members to 11 from eight, with Kalanick exclusively involved in filling the extra seats. They don't hold seats on the board or a majority of the company's stock, but the letter said they're seeking other shareholders to add their signatures.

Early this week, Uber Chairman and co-founder Garret Camp confirmed to the employees that Kalanick was not coming back as CEO. The lawsuit seeks an injunction to block Kalanick's right to appoint new directors, asserting he had agreed to give up those rights when he stepped aside as CEO. "It remains all about people, and it's clear to me the stability of our board of directors, the selection of our new CEO, and the empowerment of our management team is what is needed most". The lawsuit cites an agreement entered with Kalanick indicating that he would give up those rights when he resigned as CEO. The departure of Travis Kalanick as chief executive from a company he founded was deemed to be the first step in a move to make the firm presentable again. The investor indicated that some of the top CEOs are scared to take up the job.

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