The voting power that Mr. Kalanick has within Uber is crucial as the company wrestles with issues, including sexual harassment claims and intellectual property disputes, that have raised questions about its leadership. On Sunday, Uber’s board met for nearly seven hours to discuss these matters and to weigh whether Mr. Kalanick should take a three-month leave of absence. If he takes such a leave, it would be his longest absence from Uber since he helped found it in 2009.
Yet even if Mr. Kalanick were to take time off, his ability to influence Uber’s direction would appear to be secure. He and his allies hold a hefty number of what are known as “super-voting shares” that give them 10 votes a share, or an outsize vote. The employee buyback agreement cements Mr. Kalanick’s control, giving him more sway on any matter put before all shareholders.
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.
Amassing voting rights will not help Mr. Kalanick win in all situations. For matters that are put only to a board vote, such as whether to remove top executives, each of Uber’s seven voting members has one vote. And Mr. Kalanick will not control the voting rights associated with the employee stock options if he steps down or is ousted as chief executive, leaves the board, or is no longer dedicating the vast majority of his professional time to Uber, under the terms of the employee buyback agreement.
A spokesman for Uber declined to comment on the employee stock buybacks and their terms.
Giving start-up founders special stock with enhanced voting rights has become common in Silicon Valley. That is because there are so many venture capitalists and other investors who are clamoring to buy pieces of popular companies that entrepreneurs have had more leverage to demand favorable terms. Early investors in Facebook, Groupon, Zynga and Snap, which makes the Snapchat app, all gave the companies’ young founders stock with extra voting power.
Since at least 2015, Uber has offered employees different versions of the share buyback program. In general, employees who have worked at the company four years and have been granted stock options — meaning the ability to buy a certain number of shares from the company at a low price — may sell part of those options back to Uber at a locked-in price. Uber pays the employee for those options over several months.
The idea behind the program is that employees can turn some of their paper wealth into cash while still working at Uber. If they quit before the entire amount is paid, the payments stop.
Such a buyback targets early employees because participants must have worked at Uber four years or more. About two years ago, when Uber had fewer than 2,000 full-time employees, it stopped issuing stock options in compensation packages and instead issued restricted stock units, which the company is not permitted to repurchase. Uber now has about 14,000 employees.