Uber’s new CEO Dara Khosrowshahi may get at least $200 million to exit Expedia
New York: Uber Technologies Inc.’s new chief executive officer likely comes with a price tag in the neighbourhood of $200 million.
Dara Khosrowshahi, who spent 12 years at the helm of Expedia Inc., held unvested stock options in that company worth $184.4 million as of Friday’s close in New York, according to data compiled by Bloomberg. Companies typically grant replacement awards to executives who must forfeit unvested equity when they leave before their employment terms have expired.
The ride-hailing company will likely also grant Khosrowshahi additional compensation, such as an annual salary and stock awards that vest over several years to ensure he remains on the job for the forseeable future. That could push his total price tag north of $200 million.
“You combine a rock star CEO with a turnaround-like scenario and you can basically assume the number is going to be stratospheric,” said Aalap Shah, managing director at Pearl Meyer, an executive compensation consulting firm, who wasn’t involved in the hire. “I don’t think they are going to get him for any kind of bargain. This is a situation where the next CEO is going to make or break this company.”
Uber won’t have to disclose Khosrowshahi’s compensation since the company is privately held. But other high-profile hires and executive promotions at Uber and other technology giants give clues to what his pay package might look like.
Uber granted 5.31 million shares worth about $250 million to hire Anthony Levandowski, an engineer specialized in self-driving cars, away from Alphabet Inc. last year. That figure was disclosed as part of an Alphabet lawsuit against Uber.
Apple Inc. awarded Angela Ahrendts $73.4 million when she joined the iPhone-maker from Burberry Group Plc, including $37 million in equity to replace awards she left behind at Burberry. Alphabet awarded Google CEO Sundar Pichai a $199 million stock grant after he was promoted to run the search engine unit, taking over some of the responsibilities of Larry Page.
Expedia’s stock dropped as much as 5.4% after news of Khosrowshahi’s departure, the biggest drop in more than a year. That shaved more than $1 billion from the company’s market value.
Khosrowshahi will face a number of hurdles as he succeeds co-founder Travis Kalanick, who grew Uber into a $20 billion annual booking business last year before scandals forced him out. Hewlett Packard Enterprise Co. CEO Meg Whitman and General Electric Co. Chairman Jeffrey Immelt were also candidates for the job.
“Hugely complicated situation, bro culture, fractured board, high profile rejections from Immelt and Whitman, no profits—I suspect they are paying him handsomely,” said Charley Polachi, a partner at Polachi Access Executive Search who wasn’t involved in the hire. Bloomberg