Uber chief unlocks $136mn in shares after beating $120bn valuation target

Uber CEO Dara Khosrowshahi has unlocked $136 million in shares after surpassing the company’s $120 billion valuation target. Khosrowshahi’s success in meeting the performance target, which was set prior to Uber’s initial public offering in 2019, is a significant achievement considering the company’s previous struggles with financial losses. Since taking the helm in 2017, Khosrowshahi has implemented cost-cutting measures, divested non-core businesses, and explored new revenue streams, resulting in a turnaround for the ride-hailing giant. The recent surge in Uber’s stock price, along with the CEO’s efforts to improve the company’s financial performance, has now allowed him to unlock a substantial payout in shares.

Background Information

Introduction to the article

This article provides an overview of Uber CEO Dara Khosrowshahi’s achievements, performance target, and valuation, as well as details about his compensation and options package. It also includes a comparison of Khosrowshahi’s package to other big tech CEOs and concludes with a discussion of the implications of his success for Uber’s future.

Summary of Uber CEO Dara Khosrowshahi’s achievement

Dara Khosrowshahi, the CEO of Uber, has unlocked $136 million in shares after successfully beating a $120 billion valuation target for the ride-hailing company. This achievement comes after a period of improved performance for Uber under Khosrowshahi’s leadership.

Details about the performance target and valuation

The performance target set for Khosrowshahi was to secure a $120 billion valuation for Uber. This target was met after Uber’s equity value averaged at least $120 billion on a fully diluted basis over 90 trading days to February 6. The valuation of Uber has significantly increased in recent months, reaching a market value of over $160 billion.

Khosrowshahi’s compensation and options package

To compensate Khosrowshahi for $160 million in options he gave up on leaving Expedia, Uber agreed to award him options over 1.75 million shares if the $120 billion valuation target was met and he remained in his position for five years. Other executives also had compensation tied to this threshold. Khosrowshahi’s options are priced at $33.65 each, and he plans to exercise them, though not within the next 90 days.

Uber’s Recent Performance

Contrast between public listing and recent improvements

Uber’s recent performance contrasts starkly with its lackluster public listing in 2019. At that time, the company failed to meet expectations for a valuation of $100 billion or more due to concerns over steep losses and battles with regulators. However, over the past year, Uber’s stock has risen by almost 150% as a result of a turnaround under Khosrowshahi’s leadership.

Steps taken by Khosrowshahi to improve results

Since taking over as CEO, Khosrowshahi has implemented several measures to improve Uber’s results. He focused on cutting costs to boost margins, offloaded non-core businesses like autonomous vehicles, and found new revenue streams through initiatives such as advertising. These strategic actions have contributed to the recent improvements in Uber’s performance.

Cost-cutting measures and offloading of non-core businesses

One of the key steps taken by Khosrowshahi to improve Uber’s results was implementing cost-cutting measures. By reducing expenses and improving operating efficiencies, Uber was able to improve its financial performance and increase its profitability over time. Additionally, the offloading of non-core businesses, such as autonomous vehicles, allowed Uber to streamline its operations and focus on its core offering of ride-hailing.

Expansion into new revenue areas

To further bolster its financial performance, Uber under Khosrowshahi’s leadership expanded into new revenue areas. One notable example is the company’s foray into advertising. By leveraging its vast user base and data insights, Uber has been able to offer targeted advertising opportunities to businesses, thereby generating additional revenue streams.

Awarding of Stock Options

Explanation of the stock options and their value

Stock options are a form of compensation that gives the recipient the right to purchase company shares at a predetermined price within a specified timeframe. The value of these options depends on the stock price at the time of exercise. If the stock price rises above the predetermined price, the options become valuable.

Details of the options given to Khosrowshahi and other executives

As part of his compensation package, Khosrowshahi received options over 1.75 million shares of Uber stock. These options were awarded to him if the $120 billion valuation target was met and he remained in his position for five years. Other executives also had compensation packages tied to this target, with a total of 2.25 million shares awarded to the executive team.

Expiration dates and plans for exercise of options

Khosrowshahi’s options are set to expire in September. According to a February filing, he plans to exercise them, although not within the next 90 days. The options held by other executives are exercisable until 2028, giving them a longer timeframe to decide when to exercise their options.

Comparison to Other Big Tech CEOs

Examples of other CEOs’ compensation packages

In comparison to other big tech CEOs, Khosrowshahi’s compensation package is not unusual. For instance, Apple CEO Tim Cook was paid nearly $100 million in 2021, while Alphabet CEO Sundar Pichai saw his total pay rise to $226 million in 2022 due to a large stock award. Amazon CEO Andy Jassy was also awarded more than $200 million in stock when he took over from Jeff Bezos.

Tim Cook, Sundar Pichai, and Andy Jassy’s pay

Among the examples, Tim Cook, Sundar Pichai, and Andy Jassy received significant compensation packages. Cook’s remuneration primarily consisted of stock awards, while Pichai’s total pay was boosted by a substantial stock award. Jassy’s stock award upon taking over as CEO of Amazon highlights the common practice of awarding stock options as a means of incentivizing and rewarding executives.

Contextualizing Khosrowshahi’s package

When contextualizing Khosrowshahi’s compensation package, it becomes clear that it aligns with industry standards and the practices of other big tech companies. The use of stock options to incentivize and reward executives is a common practice, especially in high-growth industries like technology. Khosrowshahi’s package reflects his successful leadership in turning around Uber’s performance and bringing the company’s valuation to new heights.

Conclusion

Summary of Uber’s turnaround under Khosrowshahi

Under the leadership of Dara Khosrowshahi, Uber has experienced a remarkable turnaround in performance. From struggling with losses and regulatory battles during its public listing, the company has successfully improved its financial performance, increased profitability, and achieved a valuation target of $120 billion. This achievement underscores Khosrowshahi’s strategic leadership and ability to drive growth and profitability.

Implications for the company’s future

Uber’s impressive performance under Khosrowshahi’s leadership has significant implications for the company’s future. The successful turnaround has not only enhanced Uber’s financial position but also increased market confidence in the company’s ability to innovate and adapt to changing market dynamics. This sets a positive trajectory for Uber’s future growth and potential expansion into new markets and sectors.

Discussion of the significance of the stock options

The stock options awarded to Khosrowshahi and other executives hold significant importance. They serve as a powerful incentive for executives to drive the company’s performance, aligning their interests with shareholders’. Moreover, the exercise of these options allows executives to share in the company’s success and wealth creation. This, in turn, encourages long-term commitment and leadership stability within Uber.