WeWork will narrowly avoid financial ruin and in the process reward its former leader, Adam Neumann, with as much as US$1.2 billion.
The reaction from his former colleagues, who are still facing the prospect of mass job cuts and a corporate crisis: “You’ve got to be kidding me.”
That was one of the comments posted on Tuesday on WeWork’s staff-wide communications system, reflecting a broader mood throughout its headquarters in New York.
Dozens of employees expressed indignation in interviews and messages to colleagues on company Slack channels that were relayed to Bloomberg. They requested anonymity in a bid to protect their jobs, as management weighs the dismissal of thousands of employees.
WeWork’s board on Tuesday agreed to take a bailout from Softbank Group Corp, which would secure an 80 percent stake.
The Japanese conglomerate would provide US$6.5 billion to the business as it is on the verge of running out of money.
It would also buy as much as US$3 billion in stock from shareholders at the lowest price since 2015.
Almost a third of that offer might be allocated to Neumann, in addition to a consulting fee of about US$185 million, a US$500 million credit line and the ability to appoint two board members.
In exchange, Neumann is to step down from his role as chairman.
Most employees who sell their shares to Softbank would do so for less than the paper value of their stakes when they were issued.
Mike Adams, who sold a start-up to WeWork, said the payout to Neumann was an “injustice.”
Representatives for Neumann and WeWork declined to comment.
A spokeswoman for Softbank did not immediately respond to a request for comment.
Neumann, 40, built WeWork into a global real-estate company fueled by relentless optimism and billions of dollars in investment capital and debt.
His sermons about community and mission engendered fierce loyalty among staff and investors for years.
However, his aura vanished over the last couple months when public investors were given a closer look at the business ahead of an initial public offering (IPO).
WeWork’s parent company, We Company, abandoned the IPO, and Softbank helped oust Neumann as chief executive.
In recent weeks, an executive exodus and cost-saving measures had already dampened morale. In satellite offices, many workers had stopped coming into work.
News of Neumann’s “platinum parachute,” as one former employee described it, made things a lot worse this week.
Several workers noted the irony that WeWork could not afford payroll costs associated with the planned job cuts, but that its largest shareholder, Masayoshi Son’s Softbank, agreed to pay a hefty fee to Neumann.
“So we’re too broke to pay employees severance, but Adam gets US$200m?” one post read.
Another employee posted a photo of the orphan from Oliver Twist, with the caption: “Please, Masayoshi Son, can I have some severance?”
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