Uber CEO delivers a $165 billion package
The Roadblock
Dara Khosrowshahi has led Uber through a long journey home. The Iranian born business executive was brought in as Uber’s new CEO from Expedia; replacing Travis Kalanick amidst a disastrous year the company faced in 2017.
During that time Uber was valued at $48 billion, a 30% decrease from their former valuation heights of $70 billion in 2015. The company was also under intense legal battle with Waymo (Google’s autonomous-driving technology firm) involving highly sensitive trade-secrets. The company’s malignant culture — involving sexual misconducts allegations, hostile leadership, and illegal business practices — were exposed intensely throughout the media. Uber was in trouble, and Khosrowshashi was entrusted by the board to do a massive clean-up job.
The Reparation
A little over 6 years later, the company currently boasts a market cap of $165 billion. Users of the app grew from 58 million in 2017 to 137 million in 2023. Revenue quadrupled from $7.9 billion in 2017 to $31.2 billion in 2023. Waymo and Uber are now business partners, synergizing Waymo’s autonomous-driving tech capabilities with Uber’s wide reaching global platform.
As for leadership style, Khosrowshashi’s temperament and professionalism is a bright light compared to Kalanick’s dark and hostile demeanor. The new CEO has certainly demonstrated a crash course on how to re-route a global company from a near-fatal accident.
The Reward
Upon the rise of Uber’s market cap to $165 billion today, Khosrowshashi has earned a large options reward for himself. As part of his compensation package in 2017, Uber’s board agreed to grant him options if Uber was able to reach a market capitalization of over $120 billion for 90 consecutive trading days (remember that Uber was valued at around $50 billion back then).
According to a recent SEC filing by Uber, Khosrowshashi has been granted an option to purchase 1,750,000 Uber shares at a $33.65 strike price. As of today as I write this, Uber shares are valued at $79.50. This means that he is currently sitting at an options package worth $80,237,500 (the difference between $79.5 and $33.65 multiplied by 1,750,000 shares).
For the majority of us, an $80 million liquidation opportunity would be a no brainer. But Khosrowshahi is not in any hurry. The option expires in September, 7 months from now. Sources say has plans to exercise the options, but not within the next 90 days.
It is not clear why the CEO is planning on waiting over 3 months to liquidate a potential $80 million pay off. But if we were to read between the lines, it is likely that he believes the share price would go up further in the near future. There is still 7 months left, and given the nature of call options, there is no theoretical upper limit on how much his options can be worth.
What Dara Khosrowshashi has done to transform Uber is certainly commendable. Let us hope he continues to drive the company towards further victories ahead.
