travis-kalanick

Travis Kalanick’s unexpectedly swift, full departure from Uber Technologies Inc. as chief executive has punched yet another hole in a company left honeycombed by more than a dozen combined executive exits and vacancies.

It was widely reported Wednesday that Kalanick will leave his CEO post, though he will remain on the company’s board of directors.

In the wake of this change, Uber’s legal department will have to get answers to several questions, said legal consultants and private-practice attorneys unaffiliated with the San Francisco-based company, which did not respond to request for comment.

These include: Who should the department report to? What recommendations from Covington & Burling, which investigated corporate culture connected to allegations of sexual harassment and discrimination at the company, are immediately actionable? And for the chief legal officer, Salle Yoo, who was recently promoted from GC to CLO, an especially large question remains: Will she be called in as interim CEO in Kalanick’s stead?

Not immediately having an interim CEO named by now in a situation like this is unusual, said Kunzler Law Group partner Jon Klassen, who was formerly general counsel at BioMed Realty Trust.

“In my experience, at a public company the board views as one of its primary responsibilities as thinking about succession,” he said. Klassen spoke based on his own experiences, though Uber is a private company. He noted that at BioMed, there was a specific document in place with individuals named to immediately step in as interim leaders if the CEO departed. “But in this case, it’s such a mess,” said Klassen. “The CEO was looking to hire another CFO, the GC is now going to be the CLO. It’s hard to know what it means.”

Uber has lost scores of executives in 2017, and it has several vacancies to be filled. Open roles include chief operating officer, chief finance officer, senior vice president of engineering, general counsel, chief marketing officer and chief diversity officer. Departures have included the former VP of product and growth, Ed Baker; senior vice president of business, Emil Michael; head of finance, Gautum Gupta; company president, Jeff Jones; SVP of engineering, Amit Singhal; head of the company’s autonomous driving division, Anthony Levandowski; and SVP of communications, Rachel Whetstone.

Klassen said if he were Uber’s CLO, he would immediately ask the board for direction on what to prioritize and who to report to. Away from the board, he said, he would also review the results of the investigation performed by Covington partners Tammy Albarrán and former U.S. Attorney General Eric Holder, taking action immediately on recommendations that don’t need a CEO’s input. That includes recommendations such as communicating more closely with the company’s human resources department, Klassen said. And he added day-to-day work for the legal department should remain the same.

“Figuring out how to protect the company.” Klassen said. “You can do that without board direction.”

Uber’s CLO could also expect to be called on to act as the interim CEO, said Susan Hackett, CEO of consulting firm Legal Executive Leadership. “This could be [a situation] where the board of directors is asking [Yoo] to step in,” Hackett said. “Making sure the line of communications is being driven so that the company will be on the right side of issues, interpreted by someone who understands regulatory risks and the legal environment, that’s probably a sound step.”

The move, though uncommon, has been done. In September 2016, American Apparel’s then-CEO, Paula Schneider, wrote a letter of resignation to her board, opposing a possible sale of the company. General Counsel Chelsea Grayson, who was hired in 2014, was quickly chosen to fill in. She still holds the CEO title today.

In 2015, when United Airlines CEO Oscar Munoz took sudden medical leave after an unexpected heart attack, general counsel Brett Hart was named acting CEO four days later.

Hackett said Yoo’s recent promotion also shows a “vote of confidence” in her work. “That’s not something you ask of someone if you’re unhappy with their performance,” she said.

Uber did not respond to questions about who Yoo is currently reporting to, if anyone, and if the company has considered giving her a larger role after Kalanick’s exit. On June 13, when Kalanick initially told the company he was taking an indefinite leave of absence, he said Uber would be run by his direct reports.

As for Kalanick’s exit itself, it probably included very little legal work for either an outside law firm or for in-house counsel, said Hirschfeld Kraemer founding partner Stephen Hirschfeld.

Hirschfeld, who has been involved with conversations at several companies specifically about executive exits, said a chief executive’s employment contract often includes a road map for how to treat a departure. That includes deciding whether the executive was fired “with cause” or “without cause” and what kind of payout to deliver, including stock options and bonuses.

He said some companies choose to take the legal work of letting go of the CEO to an outside law firm, simply because it can be a “smarter practice to establish a temporary wall” between the legal department and the chief executive, who may have worked closely together for years. It is not a move made to avoid a conflict of interest, he said.

The entire process of terminating an executive is “relatively simple,” Hirschfeld said.

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