By CCN: Uber has suffered a defection from the C-Suite, and the timing couldn’t be better. It’s no secret that the ride-sharing company that has been struggling with its own identity has had a rocky road since its IPO. The stock only recently recaptured the IPO price (thanks to bullish Wall Street analysts propping up the price), and there is a great deal of uncertainty surrounding the company’s future.
When it was revealed that not one but two Uber executives would be departing, things started to look up. It’s not for any other reason except it shows that the new Uber CEO is in control and is not tone deaf, and investors needed to know that. Uber COO Barney Harford, who has been in the role for about a year and a half, and chief marketing officer Rebecca Messina are leaving. Messina has only been with the company for less than a year.
Instead, Uber CEO Dara Khosrowshahi is going to take a more hands-on approach with the struggling company. Frankly, Khosrowshahi had to do something. And while it’s unfortunate to see two people lose their jobs, the CEO has just shown the market that he is willing to do whatever it takes to turn things around – even eliminate the COO position and the job of someone who has been by his side since he took the helm in 2017. Plus, Harford’s compensation last year was reportedly a hefty $48 million including stock and options. Khosrowshahi had to cut somewhere. The only thing that would have been worse is if Khosrowshahi did nothing.
Uber CEO’s Legacy Is At Play
His work isn’t done. In fact, it’s just getting started. His legacy as Uber CEO will be unequivocally tied to the performance of the company’s ride-sharing and food-delivery businesses. Both are struggling, as evidenced by the company’s recent $1 billion quarterly loss and heightened competition on both fronts.
Uber isn’t the first company to remove the COO role. That has been a trend among Fortune 500 and S&P 500 companies, according to Crist|Kolder Associates data cited in the Wall Street Journal. Wall Street analysts argue, however, that investors won’t like the uncertainty stemming from the Uber overhaul. On the contrary, investors should reward the CEO for not being in denial over the fact that the IPO was a flop and the company’s identity is in question. Too many layers of management is never a good thing, anyway.
When Khosrowshahi took over from Travis Kalanick a couple of years ago, the Uber brand was tarnished. Now he is tasked with turning the balance sheet around. The latest executive shakeup proves that he is all-in.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN Markets.