Expedia shares slump as CEO Dara Khosrowshahi leaves ship for Uber

In opening trades at Wall Street on Monday, Expedia shares slumped as much as 5.4 percent – their biggest one-day drop in 14 months – slightly paring those losses later on to trade down 4.5 percent.

Dara Khosrowshahi has been the Washington-based travel site’s chief executive (CEO) since 2005, leading the company through a period of double-digit revenue growth despite fierce competition from travel industry startups such as Airbnb.

But on Sunday, Uber’s board voted to appoint Khosrowshahi as its new CEO, replacing the ride-sharing company’s co-founder Travis Kalanick who was ousted by investors in late June.

The 48-year-old Iranian-American has not yet formally confirmed he will take the offer. But people familiar with the decision told the media that Uber hoped to fast-track contract negotiations to announce the executive to employees already this week.

Internet deal-maker

Khosrowshahi was born in Iran but grew up in New York State. He has a degree in electrical engineering from Brown University. Prior to running Expedia, he was the chief financial officer (CFO) at IAC, the internet and media conglomerate chaired by Barry Diller. IAC bought Expedia in 2003, and then spun it out into Khosrowshahi’s hands in 2005.  

The Expedia chief was one of three finalists for the role of Uber CEO, along with Meg Whitman of Hewlett Packard Enterprise and Jeff Immelt of General Electric. Immelt removed himself from consideration on Sunday morning, in what a person familiar with the matter described as a “face-saving move” after he had been told he would not get the votes necessary to be elected.

Whitman’s candidacy was a source of bitter fighting among directors after she stated publicly in July she wasn’t interested in the position. Some directors felt her re-emergence was being pushed by Uber investor Benchmark Capital, which has had a close relationship with her since her time as eBay CEO.

In 2015, Khosrowshahi was one of the most highly compensated US chief executives, receiving a pay package valued as much as $94.6 million (79 million euros) in mostly long-term stock options designed to get him to stay for several years. He now stands to make a fortune at Uber if he can steer the company to a successful initial public offering (IPO) – valued by investors at around $68 billion.

Mammoth task

The decision comes after months of infighting, leaks and divisions on Uber’s eight-person board. Benchmark Capital, one of Uber’s biggest and earliest investors, first led the ouster in June of co-founder Travis Kalanick, then sued him to try to force him off the board. Other investors chose sides, exchanging accusations and counterclaims that remain unresolved.

Moreover, the company is grappling with the fallout from allegations of sexism and sexual harassment, as well as a lawsuit by Google parent Alphabet alleging that Uber used design secrets for its self-driving program.

Khosrowshahi will have to contend with a deeply divided board and shareholder base over the future of the company. Moreover, his predecessor Travis Kalanick still sits on the company’s board and wishes to have strong input into the company’s direction. And on top of this, Khosrowshahi needs to find new executives in a number of top jobs, including chiefs of finance, marketing and operations, as well as a new independent chairman.

Currently, Uber employs 15,000 people worldwide and is still deeply unprofitable. Last year, it reported losses of more than $3 billion on the back of sales to the tune of $6.5 billion. By contrast, Expedia had sales of $8.77 billion in 2016 – up 31 percent from the year before – with net income of $281.8 million.

uhe/tr (Reuters, AFP, dpa, AP)

Article source: http://www.dw.com/en/expedia-shares-slump-as-ceo-dara-khosrowshahi-leaves-ship-for-uber/a-40275434?maca=en-rss-en-bus-2091-xml-atom