- Uber's hotly anticipated initial public offering last year left many investors disappointed.
- Adding to the fallout is a new lawsuit by employees who say an acceleration of their stock units' issue date saddled them with extra taxes.
- Three days before its IPO, Uber moved the issue date for those units, meaning they were taxed at prices higher than if they had been issued as originally planned, and taxed six months later.
- Uber says the lawsuit lacks any merit.
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190 Uber employees have filed a lawsuit against the ride-hailing giant accusing it of indirectly raising their tax bills when it accelerated the issue date of their stock options ahead of its lackluster IPO last year.
Three days before Uber went public in one of the most high-profile listings of the year, the company moved up the issue date of employees' restricted stock units, or RSUs. According to the lawsuit, those units were originally supposed to turn into shares six months after the IPO, but still came with the same six-month lockup period.
Because shares were worth $45 on the new issue date — the price at which they were taxed — and $27 by the time they could be sold, the employees were collectively saddled with more than $9 million in extra tax burden, the lawsuit claims.
The company says the lawsuit's claims are "simply without merit."
At the time, Uber said in a memo that the change was "in the best interests of the RSU holders, as well as in the best interests of the company." And, according to the Financial Times, it helped Uber solidify how much tax it would owe on the employees' behalf. RSUs are a common form of employee compensation, especially at tech firms.
Still, the lawsuit says the move was "self-serving," and is asking the court to force Uber to pay the the difference in employees' after-tax positions had the issue date instead been six months from the IPO. It's one of a slew of lawsuits from investors who lost money as Uber shares sank by more than one-third in their first months of trading.
"Uber wasn't helping anybody but itself," Ray Gallo, the lawyer representing the employees, said. "It was doing what was best for Uber, in breach of the RSU agreements, and betting on the future share price with the financial risk being borne by the employees."
Read the full complaint:
Axel Springer, Insider Inc.’s parent company, is an investor in Uber.
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