SAN FRANCISCO — Travis Kalanick, the chief executive of Uber, already wields plenty of control over the company because it is structured to favor its founders. But Mr. Kalanick is quietly amassing even more control than entrepreneurs typically enjoy at their start-ups.
That is because Mr. Kalanick has been gaining voting rights power at Uber, a privately held ride-hailing company, through employee share sales. Uber staffers who sell even part of their stock back to the company under a repurchase program must give the voting rights associated with all of their shares to Mr. Kalanick, according to a copy of the buyback agreement obtained by The New York Times.
Under the terms, Mr. Kalanick could gain control of nearly 8 percent of the voting rights of one kind of Uber stock, Class A, and 2 percent of the voting rights of another type of stock, Class B. It is unclear how much of those types of stock he already owns.
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, 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.
Fewer than 100 Uber employees have participated in the buyback program, according to a person familiar with the program, who asked to remain anonymous because he was not authorized to discuss the private contracts. Even so, what those employees relinquished in voting rights as part of the buyback program is onerous.
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.
The agreement also obligates Uber to buy back an employee's stock at a price that tracks the value of the company's common stock, as determined by an outside party, and that price is locked in for the life of the payout. Uber's valuation has skyrocketed over time, to nearly $70 billion. More employees may take the buyback deal now amid worries that the current management troubles could affect the company's valuation.
Uber, which is based in San Francisco, is working with a third party to re-evaluate the value of its stock, according to a person familiar with the process, who asked not to be named because he was not authorized to speak publicly.
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