Former WeWork CEO Adam Neumann is reportedly set to make a stupid amount of money in a deal meant to help the business he co-founded stay afloat.
The Wall Street Journal reported Tuesday that after WeWork was presented with two potential packages intended to prevent it from running out of cash by next month, the company’s board chose a deal with SoftBank over one from JPMorgan Chase. But more intriguing than the fact that SoftBank — a company that’s already dumped a ton of investment into WeWork — has stepped in to save WeWork’s arse is a report by the Journal that Neumann is set to make away with $US1.7 billion ($2.5 billion) in the deal.
The decision was previously rumoured to be imminent in earlier reports from both Bloomberg and CNBC this week.
Citing sources familiar with the matter, the Journal reported that SoftBank will additionally offer Neumann somewhere in the ballpark of $US500 million ($730 million) in credit to pay off a previous line of personal credit from JPMorgan Chase (one of a number the bank extended to the ousted former CEO). The Journal said that Neumann will further get a $US185 million ($270 million) consulting fee.
SoftBank is expected to buy about $US1 billion ($1.5 billion) in stock from Neumann, the Journal said, and the co-founder — who stepped down from his role as chief executive officer in September — is said to be exiting his role as chairman of We Company. As previous reports noted, the deal will further sideline the man who helped build WeWork’s empire as the company works to right the ship after the company’s failed initial public offering.
Neither Softbank nor WeWork immediately returned requests for comment about the reports.
Many of WeWork’s troubles have been playing out on the public stage for months now. Securities and Exchange Commission paperwork detailing the company’s financials ahead of its IPO revealed it was haemorrhaging millions of dollars year after year.
Multiple profiles of Neumann gave the impression that he grossly mismanaged his company and engaged in bizarre and unprofessional behaviour in work environments. Then there was the disastrous IPO, which was delayed due to concerns over the company’s leadership and financial standing.
On top of all of that, a report found that WeWork’s Wi-Fi was appallingly under-protected and exposed an “astronomical amount” of data. There was the report that its phone booths may have a potentially toxic amount of formaldehyde, with the company removing roughly 700 from service at its sites while it conducted “testing.”
There was news of the closure of the company’s Manhattan private school WeGrow, and a report this week that the company was delaying the layoff of thousands of employees because it couldn’t afford severance.
All of this, and Neumann — who oversaw this operation until last month — is still walking away from the fire he lit under this business with more nearly $US1.7 billion ($2 billion). A truly spectacular grift from the same man who tried to convince us that his real estate venture was tech innovation. Unbelievable.