WeWork founder Adam Neumann received $ 245 million in company stock and $ 200 million in cash earlier this year, as part of a huge exit program from the office rental company that it led to dizzying heights before its equally dramatic fall.
The price comes nearly two years after a disastrous attempt by the company to go public and the ouster of Neumann.
The post-divorce payment, the Wall Street Journal reported Thursday, is part of a renegotiation of Neumann’s 2019 exit plan with lead investor SoftBank, and designed to pave the way for a new effort to list WeWork as part of the acquisition for special purposes. business.
In addition to the $ 245 million grant, Neumann received $ 200 million in cash, was able to refinance $ 432 million in debt on favorable terms, and allowed a finance company controlled by the former CEO to sell. $ 578 million in WeWork shares.
Neumann’s ability to negotiate such rich terms was aided by the fact that his holdings controlled 10 times the votes of a normal shareholder, and he was able to argue for a higher price to cede control.
Files filed with U.S. regulators also showed the extent of losses suffered on the sale of acquired companies when Neumann attempted to expand WeWork beyond its original office rental business. Ten companies costing $ 759 million were sold for just $ 164 million. A $ 63 million corporate jet, a Gulfstream G650ER, was also sold.
WeWork was valued at $ 47 billion at the start of 2019, but then fell to around $ 8 billion, excluding debt, and the extent of Neumann’s separation from the company has shocked corporate governance experts.
“The captain sunk the ship into a bridge and then received the ship’s value to leave,” says Charles Elson, a corporate governance expert at the University of Delaware. “The question is, should you reward someone who has exhibited problematic behavior? This is obviously what happened here.
The settlement, Elson predicts, is likely to anger other WeWork shareholders and former employees who do not benefit from similar terms. According to the Journal, more than 90% of WeWork’s staff held stock options that are worth less than when SoftBank bailed out the company in 2019. Thousands of employees were also laid off, forfeiting all of their options. .
Initially, Neumann relinquished his seat on the board for an advisory fee of $ 185 million, permission to sell $ 972 million of shares and to refinance $ 500 million of debt. The current compensation is a renegotiation of this agreement which includes the cancellation of WeWork leases with two of the four buildings partially owned by Neumann.
After WeWork’s initial public offering failed, Neumann and his wife, Rebekah Paltrow Neumann, spent time in Israel, but have since returned to the United States. Last year, it acquired the rights to the program developed for WeGrow, a private school launched as an educational arm of the We brand.
WeWork, meanwhile, reports that its shared workspace occupancy has jumped to 50% after collapsing 72% during the pandemic. BowX Acquisition Corp, a specialist acquisition company merging with WeWork, assesses its value at $ 9 billion, including debt. SoftBank, which has invested more than $ 11 billion in the company, told investors it valued WeWork at $ 2.9 billion, according to the Journal.
Neumann’s latest settlement suggests that investors have learned little, Elson says. “This is the problem of those times. No one is held responsible, ”he said. “Neumann lost money for people who invested with him and came away greatly enriched, and that doesn’t make a whole lot of sense.”