Following achieving a performance target intended to secure a $120 billion valuation for the ride-hailing company, Uber’s Chief Executive Officer, Dara Khosrowshahi, was granted stock options valued at around $136 million. The reward was created before Uber’s 2019 IPO. According to a recent Financial Times report, it appeared unlikely Throughout the company’s public life because of consistent losses reaching tens of billions of dollars.
Nevertheless, Uber’s financial performance has significantly improved under Khosrowshahi’s direction. According to a recent filing, Uber’s stock value averaged at least $120 billion on a fully diluted basis for a 90-day trading period that concluded on February 6, meeting the CEO’s performance target.
Khosrowshahi earned payment for giving up $160 million in options when he left Expedia, where he was formerly the highest-paid chief executive in the S&P 500. He joined Uber in 2017. Under the terms of the deal, Uber promised to give him options over 1.75 million shares if the $120 billion value goal was met, and he continued in his position for five years.
Furthermore, achieving this valuation level was a condition of other executives’ compensation packages, which might have totalled millions of dollars. The ride-hailing business stated in the report that the package was “necessary given the challenges that Uber faced in 2017 and the critical role that he would play in Uber’s transformation plan”.
Uber’s performance lately is very different from its dismal public debut in 2019, during which it fell short of expectations for a $100 billion or higher valuation due to severe losses and regulatory disputes. The company’s market capitalization was about $82 billion because the shares were trading at or below the $45 IPO price for years.
Nonetheless, a turnaround has caused Uber’s stock to soar by about 150% over the previous 12 months. Since assuming leadership, Khosrowshahi has reduced expenses to increase profits, divested non-essential ventures like self-driving cars, and discovered fresh revenue streams like advertising. Uber announced the repurchase of its first shares earlier this month.
Due to this, Uber’s market valuation has increased to over $160 billion. A total of 2.25 million shares, valued at approximately $175 million at Uber’s current share price of between $33 and $41, are now available for purchase by Khosrowshahi, Chief Legal Officer Tony West, and Chief People Officer Nikki Krishnamurthy, according to documents.
Khosrowshahi would need to spend $59 million to activate his options, valued at $33.65 apiece. He intends to exercise them, but not “within the next 90 days,” as stated in a February filing, even though they expire in September. There are options available to both West and Krishnamurthy that expire in 2028. All three of Uber’s former chief financial, operating, and technology officers left the company between 2019 and 2023, forfeiting their rights to options over a combined 2 million shares subject to the $120 billion barrier.
For CEOs of Big Tech companies, Khosrowshahi’s compensation package is typical. In 2021, Apple CEO Tim Cook had a salary of around $100 million. Thanks to a sizable stock award, Alphabet CEO Sundar Pichai’s total compensation increased to $226 million in 2022. After Jeff Bezos had succeeded, Andy Jassy of Amazon was given more than $200 million in stock.
