This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2017/06/11/technology/uber-holder-report.html

The article has changed 6 times. There is an RSS feed of changes available.

Version 2 Version 3
Uber’s Board to Discuss Leave of Absence for Top Executive Uber Weighs Leave of Absence for Top Executive
(about 9 hours later)
SAN FRANCISCO — Uber’s board of directors was meeting on Sunday to discuss a leave of absence for Travis Kalanick, the company’s chief executive, according to three people with knowledge of the matter. 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.
Separately, the board members were expected to address the recommendations of a monthslong investigation by the former attorney general Eric H. Holder Jr. into the company’s culture, a deeply researched look backed by interviews with hundreds of employees. The meeting, held at the Los Angeles offices of Covington & Burling, Mr. Holder’s law firm, was expected to last a number of hours before the board made any decisions on Mr. Holder’s recommendations. The three people requested anonymity because they were not authorized to speak for the company. Uber directors were weighing a three-month leave of absence for Travis Kalanick, the chief executive who built the start-up into a nearly $70 billion entity, according to three people with knowledge of the board’s agenda. In addition, the board was discussing the possible departure of a top lieutenant, Emil Michael, said the people, who spoke on the condition of anonymity because the discussions were confidential.
One of the recommendations in Mr. Holder’s report is that Emil Michael, Uber’s senior vice president of business and a close confidant of Mr. Kalanick’s, be asked to leave the company, according to the three people. The firm’s recommendations will include other sweeping changes at the company, and the board was expected to vote to accept the firm’s findings. The moves — if enacted — would scale back the involvement of Mr. 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.
Mr. Michael has not resigned, nor has he been requested to do so, according to a person familiar with the matter, but he is evaluating his options for the future. Mr. 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, Mr. 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.
Uber has spent the better part of the last six months dealing with allegations of sexual harassment from current and former employees. Last week, it emerged that executives had mishandled the medical records of a woman raped by an Uber driver. The company also acknowledged using software to hide Uber drivers from the law. Any reduction of his involvement in Uber would be significant, given that he molded the ride-hailing service in his own brash image. Mr. 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 personnel in some cities.
In the weeks leading up to the meeting, Uber executives had vowed to reset the company. But skeptics of the company’s resolve to fix what even Mr. Kalanick says is broken are focused on one question: How far is Uber willing to go to change itself? The discussions by the nine-member board preceded a report, scheduled for release on Tuesday, by the former attorney general Eric H. Holder Jr., who was retained by Uber to investigate the company’s internal culture. In recent months, Uber has fired more than 20 employees for infractions including sexual harassment and discrimination.
“Can they use this report as an opportunity to turn the corner?” asked Andrew D. Gilman, chief executive and founder of CommCore, a crisis communications firm. “Or is this just window dressing on the way to more bad behavior?” “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.”
It is a crucial moment for the ride-hailing company, which is privately valued at nearly $70 billion and operates in hundreds of cities around the world. Uber is fighting significant employee attrition, the tens of thousands of drivers it depends on are angry about their pay, and investors are concerned that one of the most well-funded start-ups in history has come unglued. Uber declined to comment on the company discussions, which were held at the Los Angeles offices of Covington & Burling, the law firm where Mr. Holder works. Mr. Kalanick, through a spokesman, declined to comment. News of the discussions was previously reported by Reuters.
Adding to the concerns is the tricky structure of the San Francisco company’s board, as well as Mr. Kalanick’s outsize voting power, which, when aligned with board allies, essentially gives him the right to ignore any of the recommendations of the report prepared by Mr. Holder. The internal drama at Uber has gripped the broader technology industry, as the ride-hailing company has come to symbolize how start-up 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 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. 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.
Because Mr. Kalanick and a few close allies hold a majority of these shares, his position has remained safe through months of controversy. 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.
This hinges on the continued support of Garrett Camp, Uber’s co-founder and its chairman, and Ryan Graves, a longtime employee and well-liked Uber executive who is a board member, according to five people familiar with the board’s internal workings who requested anonymity because they were not authorized to speak publicly. Both have super-voting rights. Other board members with super-voting shares, like Arianna Huffington, are also supportive of Mr. Kalanick. Even so, Mr. 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.
J. William Gurley and David Bonderman, two venture capitalists and independent board members who also hold super-voting shares, are worried about the company’s management, these people said. Outside investors are also nervous about the string of scandals, and have called board members directly about their concerns. Because Mr. Kalanick and a few allies hold a majority of those shares, his position has been safe — and would most likely remain so, even if he took a leave.
All of the board members agree that significant changes are needed, but what those changes should be is the question. Some Uber board members have expressed support for Mr. Kalanick. Garrett Camp and Ryan Graves, who have been with Uber since its early days, have long believed that Mr. Kalanick’s leadership was necessary to buck against an aggressive incumbent taxi industry. Arianna Huffington, the Huffington Post founder and an Uber board member, has publicly attested to Mr. Kalanick’s willingness to change.
Mr. Kalanick, through a spokesman, declined to comment. News of the meeting and Mr. Kalanick’s status was reported earlier by Reuters. J. William Gurley and David Bonderman, two venture capitalists and independent board members who also hold super-voting shares, were worried about the company’s management, the people with knowledge of the matter said. Outside investors were also nervous about the string of scandals and have called board members directly about their concerns.
Mr. Kalanick’s executive allies were in a trickier position. One of the recommendations in Mr. Holder’s report was that Mr. Michael, Uber’s senior vice president of business and a close confidant of Mr. Kalanick’s, be asked to leave the company, according to the three people. The firm’s recommendations also include other sweeping changes at the company, and the board was expected to vote to accept the firm’s findings.
Mr. Michael has not resigned, nor has he been asked to do so, according to a person familiar with the matter, but he was evaluating his options.
This year, Uber’s general counsel and some board members recommended that Mr. Michael take leave from his position at the company until the results of the Holder report were delivered, according to three people familiar with the matter.
Mr. Michael, who has been at the center of three controversies at the company, refused to step down, and Mr. Kalanick did not force him to do so.
Mr. Michael did not respond to a request for comment.
Employees and close watchers of the company worry that even the most damning conclusions of the Holder investigation could be ignored.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, an employment lawyer at 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.” “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.”
Uber has long been known for its combative, raucous culture. The downside of that environment became clear in February when Susan Fowler, a former Uber engineer, wrote a lengthy public blog post detailing her history of sexual harassment and systemic problems with a dysfunctional human resources department.
The scandals kept coming. In March, the tech news site The Information reported that Mr. Kalanick and other executives attended an escort bar in South Korea with Uber employees, which led to a human resources complaint from an employee who was present.
Uber’s reputation became so bad that hiring managers in San Francisco were ordered to stop sending recruiting emails to potential candidates for a number of weeks, according to two people familiar with the matter. The company has since resumed recruiting efforts.
While management deals with the crises, Mr. Kalanick and other executives have ignored some advice from top advisers.
This year, Uber’s general counsel and some board members advised that Mr. Michael, the company’s senior vice president of business and Mr. Kalanick’s strongest corporate ally, take leave from his position at the company until the results of the Holder report were delivered, according to three people familiar with the matter.
Mr. Michael, who has been at the center of three separate controversies at the company, refused to step down, and Mr. Kalanick did not force him to do so.
Executives, however, have begun to make changes in other parts of the company. Uber is dealing with more than 200 complaints from current and former employees, doling out warnings, mandatory workplace training or, in some cases, firing the worst offenders.
Last week, Uber announced that it had terminated 20 employees over harassment, discrimination and other complaints uncovered in a separate internal investigation.
Uber hired Frances Frei, a well-regarded Harvard Business School management expert, to be its senior vice president of leadership and strategy and to tackle restructuring an organization that in just a few years has grown to more than 12,000 employees on several continents.
“My goal is to make this a world-class company that can be proud of itself in the end, rather than embarrassed,” Ms. Frei said in an interview with Recode.
The company also hired Bozoma Saint John, a former Apple executive, as its chief brand officer, a new position. She now has the task of repairing Uber’s deeply tarnished public image.
Mr. Kalanick is receiving management coaching from Joe Hubbard, an executive training director at Thrive Global, the company owned by Ms. Huffington, according to three people familiar with the arrangement. Uber and Ms. Huffington declined to comment.
Mr. Kalanick is also dealing with the death of his mother, Bonnie Kalanick, last month, in a boating accident that also left his father seriously injured. The board meeting on Sunday is being held in Los Angeles because in the weeks since his mother’s death, Mr. Kalanick has been spending time with family there, where he grew up.
The accident has complicated the timing and discussions around the investigation into Uber’s culture and leadership.
Still, there are concerns that for some of Uber’s executives, the rules do not seem to apply.
Eric Alexander, Uber’s former vice president of business in Asia, who obtained the medical records of a woman raped by a driver in India, was not among the 20 employees terminated. The New York Times asked Uber in April about his handling of the investigation into the rape. Mr. Alexander was fired only after several other reporters began asking last week about his actions.
The solution, management consultants said, may be a companywide reset.
“To me, they don’t just need a culture change,” 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.”