CEO’s Revelations & Stock Underperformance

[ad_1]

The Gist

  • Unexpected revelation. Uber CEO Dara Khosrowshahi’s recent driving experience exposed significant product flaws, raising questions about the company’s priorities and leadership.
  • Stock underperformance. Uber’s stock dropped around 40% last year, while Khosrowshahi received a $24 million compensation package.
  • Executive pay packages. Recently investors in some tech companies have questioned  high executive pay amid declining stock performance, suggesting that Uber may face pressure from activist investors.

Something was just a bit off in the Wall Street Journal’s profile of Dara Khosrowshahi. The Uber CEO had been driving and delivering for the first time in his tenure and wanted to make the point on record. The Journal portrayed Khosrowshahi as a hands-on CEO learning the product with a splashy image of him in the driver’s seat. The largely-positive framing was undermined, however, by the details in the story.

Uber CEO Exposes Flaws — 6 Years Into His Tenure 

Khosrowshahi, the leader of a $63 billion company, admitted in the article he’d never used Uber as a driver until recently. And that, once he did, he found significant flaws. Fixing these issues was admirable, but waiting until nearly six years into his tenure to tackle them was unmissable. Attempting to convey progress, the profile left some analysts, investors and people close to the company wondering about its trajectory. 

“The WSJ article was a preposterous PR stunt,” Leonard Sherman, an executive in residence and adjunct professor at Columbia Business School, told me via email. “Dara is clearly on a driver charm offensive, trying to put lipstick on a pig.” 

Related Article: Win-Win: Address Employee Experience for Better Customer Experience 

Uncovering Uber Driver App Flaws After Driver Shortage Reckoning

While driving, Khosrowshahi found the driver signup experience frustrating and “clunky.” He learned that Uber wouldn’t clearly tell him when he was picking up two orders in one restaurant. He discovered that when he accepted a new delivery job, the app sent him to the new location even though he hadn’t completed his current order. And, as he drove, Khosrowshahi experienced a still-unsolved practice called tip-baiting, where customers write in big tips to expedite delivery and then reduce them once they have their food. 

An Uber spokesperson told me that the company had dedicated more resources to its driver app, and Khosrowshahi’s driving was part of an effort to improve. “As a company we were unfortunately more focused on the rider app than the driver app, until the post-pandemic driver shortage led to a reckoning and company-wide shift, which included increased on-the-ground attention from folks who didn’t already work on the driver app everyday,” the spokesperson said. 

“To illustrate that further, there are now four times as many Uber employees driving or delivering than there were before the pandemic.” 

Related Article: How Focusing on People Can Help Your Digital Transformation Take Flight 

Uber Shifts Focus to Driver Satisfaction Amid Tightening Finances

Like every tech company, Uber is adjusting to the end of zero interest rate policy, and its focus on drivers is partially a result. When interest rates were near zero — and growth mattered more than margin — Uber could fix a subpar driving experience by luring drivers in with bonuses. In 2021, for instance, Uber announced a $250 million “stimulus” to get more drivers on the road. But now, due to market conditions, the company has less cash to throw around. So it has to focus on whether drivers actually enjoy working with it. 

Khosrowshahi’s appearance in the Wall Street Journal, therefore, seemed to address two audiences. 1) Wall Street investors who worry Uber can’t attract drivers without cash bonuses. 2) Drivers who might drive more via a better product experience. 

CEO Pay Amid Stock Drop Sparks Questions on Shareholder Alignment

For some investors, the article landed with a thud. More than one pointed me to Khosrowshahi’s compensation, approximately $24 million last year, and wondered why Uber investors were 94% in favor of that package when the stock dropped approximately 40% last year. “There’s not strong alignment of interests with shareholders, which may cause their say-on-pay approval rate to come under pressure,” one Uber investor told me. Khosrowshahi made 146.9% of his $2 million bonus for better-than-baseline company performance last year. After Salesforce and other tech firms felt pressure from activist investors, Uber might be another candidate.

[ad_2]

Source link

digiflowz
Digiflowz
Logo