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Uber CEO Dara Khosrowshahi received stock options worth about $136 million after meeting a performance target to secure a $120 billion valuation for the ride-hailing company.
The award, which was set before Uber's stock market flotation in 2019, seemed unlikely to be fulfilled for most of its life as a public company as it suffered persistent losses running into the tens of billions of dollars.
But Uber's results have improved recently under Khosrowshahi. The company said in a recent filing that its CEO performance target was achieved after its stock averaged at least $120 billion in value on a fully diluted basis over the 90 trading days through February 6.
Khosrowshahi was hired in 2017 from Expedia, where he was once the highest-paid CEO in the S&P 500. To compensate him for the $160 million in options he gave up upon leaving Expedia, Uber agreed that he would receive more than $1.75 million in options. shares if the $120 billion goal is achieved and he remains in office for five years. Other executives also received compensation that could amount to millions linked to the bottom line.
The ride-hailing company said the package is “necessary given the challenges Uber faced in 2017 and the critical role it will play in Uber's transformation plan.”
Uber's recent performance is in stark contrast to its lackluster public listing in 2019, when it failed to meet hopes for a valuation of $100 billion or more amid concerns about huge losses and battles with regulators.
For years, shares traded at near or below their initial public offering price of $45 per share, giving the company a market value of about $82 billion.
But Uber shares have jumped about 150 percent over the past 12 months in response to the shift. Since taking office, Khosrowshahi has cut costs to boost profit margins, divested non-core businesses such as self-driving vehicles, and generated revenue in new areas such as advertising. Earlier this month, Uber announced its first share buyback.
This helped push Uber's market value to more than $160 billion. It is higher on the fully diluted basis used in the performance target, which also accounts for non-traded shares, including large amounts granted as stock to employees in recent years.
According to the filings, Khosrowshahi, chief legal officer Tony West, and chief people officer Nikki Krishnamurthy now have the right to buy a combined total of 2.25 million shares, worth about $175 million at Uber's current share price, at between $33 and $41 per share.
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Khosrowshahi's options are worth $33.65 each, so exercising them would cost him $59 million. It expires in September, and he plans to exercise it, but not “within the next 90 days,” according to the February filing. West and Krishnamurthy have options that can be exercised through 2028.
Uber's former financial, operating and technology executives lost their rights to options on more than 2 million collective shares that were also tied to the $120 billion threshold, because all three left the company, departing between 2019 and 2023.
Khosrowshahi's pay package is not unusual for CEOs of major technology companies. Apple CEO Tim Cook earned nearly $100 million in 2021. Alphabet CEO Sundar Pichai saw his total salary rise to $226 million in 2022, thanks to a giant stock award. Amazon CEO Andy Jassy received stock worth more than $200 million when he took over from Jeff Bezos.
Additional reporting by Patrick Temple West in New York
