WeWork co-founder Adam Neumann will be walking away with $1.7b payout as investors seize control of the company. Apart from Neumann, no one seems to benefit as thousands of employees wait to hear if they will lose their jobs, reports The Guardian.
Neumann used to describe the company as the “largest physical social network in the world,” which would solve the problem of orphaned children. Now, a company in crisis, WeWork’s boss stepped down and will now be leaving with $1bn from the sale of his shares plus a $185m “consultancy fee” and a $500m line of credit.
The bailout deal will once again slash the valuation of the company. Once valued at as much as $65bn, WeWork is now thought to be worth $8bn. This is less than the $10bn SoftBank had invested in the company before the rescue package.
The payout to Neumann comes as WeWork weighs up to sacking about 2,000 people.
Initially, by the end of June this year, WeWork had grown to a business with 528 locations worldwide with 527,000 tenants. “The 90s and early 2000s were the ‘I’ decade,” Neumann told The Daily News back in 2011. “The iPhone, the iPod — everything was about me. Look where that got us? In a terrible recession. The next decade is the ‘We’ decade, where collaboration is the future of innovation.”
However, investors backed off by losses of close to $700m in the first half of 2019, $1.6bn in 2018, almost $900m in 2017, and more than $400m in 2016. The backlash led to the IPO’s cancellation and Neumann stepped down.
Under the terms of the rescue deal, Marcelo Claure, SoftBank’s chief operating officer, would become chairman. The Japanese conglomerate would end up owning 60% to 80% of WeWork under the proposal
Additionally, there is a rival funding package from JP Morgan Chase, worth $5bn. That deal includes $2bn of unsecured debt. The board will decide on Tuesday which one to accept.
As of now, WeWork declined to comment.
