Following Uber Technologiesâ€™ initial public offering in 2019, we engaged with the company to share Vanguardâ€™s approach to governance and discuss the Uber boardâ€™s perspective on topics including board diversity, compensation, and oversight of strategy across multiple business lines.
In our most recent dialogue, we echoed other shareholdersâ€™ concerns that the CEOâ€™s significant retention award, with a one-year vesting period, was excessive and misaligned with the long-term interests of shareholders. The total compensation package included a new-hire restricted stock unit grant of $55 million, which was not aligned with performance metrics. The company thought the grant was warranted to compensate the CEO for options the executive left behind at a previous employer in order to accept the job at Uber. The company attributed the award to the challenges of attracting and retaining top talent in a highly competitive environment. When evaluating executive compensation plans, we look to see compensation aligned to relative total shareholder return that incorporates rigorous targets with a longterm (at least a three-year) performance period.
Ultimately, the Vanguard funds voted against the Say on Pay proposal this year. We expect the board to implement appropriate incentives to better align with shareholdersâ€™ long-term interests.
Although we expressed significant concerns about executive compensation, the company did take positive steps to improve its board. Two directors, who were considered â€œoverboardedâ€ by our director commitments policy, stepped down from their excess directorships. As Uber navigates its first year as a publicly listed company, we look forward to encouraging good governance practices through productive engagements in the future.