Uber will reportedly add Sprint CEO Marcelo Claure to its board of directors as part of SoftBank’s $10 billion investment in the ride-sharing tech company, and its board will grow from 11 to 17 members in the year ahead, but what kind of value will all this new blood bring to the table?
Finding common ground could become a greater challenge as the board grows in the weeks and months ahead, simply due to the large number of people involved.
“I have never seen any research where there is a correlation to performance versus the size of the board,” TK Kerstetter, CEO of Board Resources LLC, and editor at large of Corporate Board Member. “You can’t jump to the conclusion that a large board won’t function well, but reality says that the bigger the board the harder it is to get consensus.”
And while adding more members to the board will provide Uber with some fresh perspectives, there’s no guarantee that it will lead to success.
“I don’t think size in its own right is the problem, I think it’s the composition of the board that’s creating the challenge here.” – TK KERSTETTER
“It sounds like the biggest risk in adding to the board, to me, is the lack of board leadership,” Kerstetter says. “In this particular case, I would be much more concerned with the composition of skillsets and whether there is leadership—and from the sound of it, they don’t have an independent chair at this point.”
Claure’s name was on the short list of potential replacements for former Uber CEO and cofounder Travis Kalanick, who was ultimately replaced by former Expedia CEO Dara Khosrowshahi last August. Sprint is owned by SoftBank, and Claure is expected to fill one of two board seats the investor will receive as part of the investment deal. SoftBank’s Vision Fund CEO Rajeev Misra is reportedly in line to fill the other director position.
The other newly-created seats on Uber’s board of directors have yet to be filled.
What remains to be seen is how Kalanick will respond to the changes at the company he founded, considering his clashes with directors and investors since stepping down as Uber’s chief executive. Last October, the former CEO filled two board seats that he controls with former Xerox CEO Ursula Burns and former Merrill Lynch CEO John Thain in response to a proposal from Uber and investor Goldman Sachs to reduce his voting power.
“You would have to believe that with the current mix it’s going to take a very, very strong independent chair to be able to herd the cats,” Kerstetter says. “I don’t think size in its own right is the problem, I think it’s the composition of the board that’s creating the challenge here. It has the potential to be a formula for continued unrest.”
Khosrowshahi has has indicated that he has full support from Uber’s board to move forward with an IPO for Uber in 2019.