SAN FRANCISCO - Investors in Uber Technologies will at least have a say in its management. The ride-hailing app, which is on track to go public in May, has only one class of shares alongside other governance pluses. Smaller rival Lyft, which had its initial public offering last month, and image-search firm Pinterest , whose shares started trading last Thursday, have opted instead to entrench their founders.

Uber used to be the poster child for bad corporate behavior. Under co-founder and then Chief Executive Travis Kalanick, Uber covered up a hack in 2016, faced sexual-harassment claims, triggered a regulatory backlash against aggressive expansion, and lost key executives. Part of the problem was Kalanick himself, who controlled 35 percent of Uber’s supervoting Class B shares.

New boss Dara Khosrowshahi, who joined after Kalanick stepped down in 2017, has pushed for a cleanup. Uber had already dispensed with its dual-class stock. It later appointed an independent board chairman, and directors are elected on an annual basis and must garner majority shareholder support.

There are, of course, downsides to being shareholder friendly. Uber is susceptible to the short-term demands of investors, who may get cold feet about the losses that come with its long-term growth goals. An activist could also spur changes, though it would be an expensive investment if Uber is valued at around $100 billion, as indicated by people familiar with the matter.

Lyft drove the other way on corporate governance, as many other tech companies have. Its Class B holders get 20 votes each per share. That group includes founders Logan Green and John Zimmer, who have almost 50 percent of voting power while owning only about 5 percent of the company.

Lyft also has a staggered board, meaning only one-third of directors are up for election every year. That provides Lyft with more protection from takeover bids or activist attention. On a positive note, Lyft does have an independent board chair. Pinterest goes even further. Its supervoting stockholders control 99 percent of voting power. Co-founder and CEO Ben Silbermann also chairs the board, which is staggered.

Neither Uber nor Lyft has a clear path to profitability, while Pinterest has managed to shrink its losses. Investors may tolerate that amid IPO hype and while founder-CEOs are seen as visionaries. But they may come to appreciate Uber's governance when they want to see change.

CONTEXT NEWS

- Ride-hailing app Uber Technologies has sought to fundamentally reform its workplace culture, partly by improving its governance structure, according to its draft prospectus filed with the Securities and Exchange Commission on April 11. A series of scandals and executive departures led to co-founder and Chief Executive Travis Kalanick stepping down from his position in 2017. Also that year, Uber eliminated its dual-class stock that benefited Kalanick and other early investors as part of a $9 billion investment from Japan's SoftBank.

- Uber said in its regulatory filing that changing its conduct and culture starts with a strong tone at the top set by CEO Dara Khosrowshahi and its board of directors, which is chaired by former Northrop Grumman boss Ronald Sugar. Directors are elected annually and require the approval of a majority of votes cast in uncontested ballots.

(Editing by Richard Beales and Martin Langfield)

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