WeWork boss will get $1.7 BILLION! to leave company
Neumann WeWork exit cost a bundle
The office-leasing company that once claimed its mission was “to elevate the world’s consciousness” now appears to be elevating only its former chief executive’s bank account.
WeWork co-founder and ex-CEO Adam Neumann is getting $1.7 billion to walk away from the company he cofounded — as its largest investor, Japanese investment firm SoftBank, seeks to save it from financial collapse.
As part of the broader rescue package, SoftBank has agreed to fork over $1 billion to buy Neumann’s shares, as well as a $185 million consulting fee, according to the Wall Street Journal. Neumann will also receive a $500 million line of credit from SoftBank to pay back loans to JPMorgan Chase, the Journal reported Tuesday.
SoftBank’s rescue package, meanwhile, values the co-working company at a mere $8 billion, the Journal said — well below the $47 billion valuation the company was believed to be worth before Neumann bungled its planned IPO last month.
The payment comes as WeWork has delayed plans to cut thousands of jobs — only because it can’t afford the severance costs, the Journal said.
That Neumann, 40, gets rich off the company he nearly cratered — under the supposedly watchful eye of WeWork’s board — has corporate governance experts livid.
Jeffrey Sonnenfeld, a Yale University School of Management professor, called the company’s decision to approve the payout “shameful” and “cowardly,” saying the board was “asleep at the switch” while Neumann shaved $39 billion off the company’s valuation. “He should be spending the rest of his life paying out investors, not prancing away with his six personal properties and this war chest of other people’s money,” Sonnenfeld said.
Meanwhile, the former CEO is “the only one who makes money on this deal,” Sonnenfeld added.
One reason for the payout: Neumann controlled shares that carried extra votes, giving him power to fire the entire board.
Under the deal with SoftBank, Neumann will be removed from the board. He maintains a stake in the company and will continue to be a board observer, the Journal said.
WeWork’s IPO prospects quickly went sideways last month as Neumann made headlines for alleged selfdealing, erratic behavior and drug use — reportedly including a trans-Atlantic private jet trip after which the crew found a “sizable chunk” of marijuana hidden in a cereal box on board.
Yet in IPO paperwork, WeWork — known to mix business with the spiritual, thanks to Neumann — stated that the company’s mission is “to elevate the world’s consciousness.”
“It’s hard to fathom what [the board] must have been thinking at all in this situation,” agreed Eleanor Bloxham, an adviser with Value Alliance.
Neumann will need every last penny. He and his wife, Rebekah, have spent close to $90 million on properties, according to the Journal, including a Hamptons estate, a 60-acre Westchester compound and a fourcondo residence off Gramercy Park.