Benchmark Capital, which owns approximately 13-percent of Uber, has sued the company’s founder and former CEO, Travis Kalanick for fraud, breach of contract and breach of fiduciary duty. According to the suit against Kalanick, the former CEO is entrenching himself on Uber’s board of directors after he lost his seat which was reserved for the Company’s CEO. Benchmark Capital claims that 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.
The tension between Benchmark Capital and Travis Kalanick started after the former spearheaded in the campaigns to remove Kalanick as CEO after the scandals that broke out. A little backgrounder, in June 2016 Uber decided to expand its board from 8 seats to 11. Kalanick would solely reserve the right to designate those extra seats. With this privileged, Kalanick assigned one of the seats to himself after he resigned as CEO, leaving two seats empty.
Benchmark Capital wants its vote to enlarge the board invalidated claiming that Uber did not disclose material information about Kalanick’s gross mismanagement and other misconduct. This would mean that Kalanick is kicked out of the board since the three extra seats would be eliminated.
Kalanick’s spokesperson responded, “The lawsuit is completely without merit and riddled with lies and false allegations. This is continued evidence of Benchmark acting in its own best interests contrary to the interests of Uber, its employees and its other shareholders. Benchmark’s lawsuit is a transparent attempt to deprive Travis Kalanick of his rights as a founder and shareholder and to silence his voice regarding the management of the company he helped create. Travis will continue to act in the interests of Uber and all of its stakeholders and is confident that these entirely baseless claims will be rejected.”
In related news, Uber’s first CEO, Ryan Graves, said that he will step down as VP of Operation but maintain his seat in the board.