Some WeWork Directors Seek to Replace CEO Adam Neumann

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Adam Neumann speaks onstage at a WeWork event at the Microsoft Theater in Los Angeles, Jan. 9, 2019. (Michael Kovac/Getty Images for WeWork)

Last week, WeWork, the shared-space startup which has grown exponentially over the past few years, decide to delay its much-anticipated stock-market listing, amid speculations that the company is overvalued.

Issues of corporate governance and leadership have also come to the fore, with WeWork founder Adam Neumann exposed for his eccentric behaviour on a number of occasions. A profile published last week in the Wall Street Journal revealed that  Neumann smoked marijuana on a private flight overseas, prompting the jet’s owner to recall the plane. He has also expressed a wish to become prime minister of Israel, be the first trillionaire and live forever, prompting worried investors to question whether he is the right leader for the trailblazing company, which is now the world’s biggest owner of office space.

Neumann has also been criticized for his  attempts to gain wealth at the expense of the company, such as selling the company the We trademark for 5.9 million dollars as well as his insistence that his wife be allowed to choose his successor if he is incapacitated. Neumann has also purchased buildings and leased them to WeWork, leading to questions of conflict of interest.

For these reasons, a number of WeWork directors, including officials tied to SoftBank Group Corp. , the company’s largest investor, want Mr. Neumann to relinquish his title of CEO of We Co., the parent company,and become WeWork’s non-executive chairman. This would enable his talents and proven ability to remain within the company while leaving its governance in other hands with the company needing a successful IPO to inject it with the cash needed to maintain its growth. The company burned through more than $2 billion in 2018 and analysts have projected that on its current path We will run through what it has on hand sometime next year.

Mr. Neumann still has allies among the directors as well as the ability to fire the entire board thanks to shares he controls that carry extra votes. But SoftBank, which has invested more than $9 billion into the company and is represented on the board, has considerable influence too, and We needs it to continue pumping in cash.

The company has suffered significant financial losses- $1.6 billion last year alone, despite its rapid revenue growth, and it is unclear how long and how much Softbank will continue to invest in the company, leaving it heavily dependent on the success of the now-delayed IPO.

 

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