WeWork staff outraged at massive payout for former CEO as they face redundancy

Adam Neumann set to leave with over $1bn while management considers dismissing thousands of employees

Ellen Huet,Gillian Tan
Wednesday 23 October 2019 13:06
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Adam Neumann, the co-founder of WeWork, will leave the board of the crisis-stricken company pocketing over $1bn (£778m), while thousands of his ex-colleagues face losing their jobs. Their reaction: “You’ve got to be kidding me.”

That was one of the comments posted on the staff-wide communications system at the co-working company, 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. They requested anonymity in a bid to protect their jobs, as management weighs up the dismissal of thousands of employees.

WeWork’s board agreed on Tuesday to take a bailout from SoftBank, which will secure an 80 per cent stake. The Japanese conglomerate will provide $6.5bn to the business which is on the verge of running out of money.

SoftBank will also buy as much as $3bn in stock from shareholders. Almost a third of that offer may be allocated to Mr Neumann, in addition to a consulting fee of about $185m and a $500m loan, people familiar with the matter have said. In exchange, Mr Neumann will step down from his role as chair.

Representatives for Mr Neumann and WeWork declined to comment. A spokesperson for SoftBank didn’t immediately respond to a request for comment.

Mr Neumann, 40, built WeWork into a global real estate company fuelled 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.

But 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, The We Company, abandoned the IPO, and SoftBank helped oust Mr Neumann as chief executive officer.

In recent weeks, an executive exodus and cost-saving measures have already dampened morale. Especially in satellite offices, many staff had stopped coming into work. News of Mr Neumann’s “platinum parachute”, as one former employee described it, made things a lot worse this week.

A link to a news article about the deal on WeWork’s Slack network on Tuesday drew more than 100 “thumbs down” emojis from employees. 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 Mr Neumann. One post read: “So we’re too broke to pay employees severance, but Adam gets $200m?”

Another employee posted a photo of the orphan from “Oliver Twist” with the caption: “Please, Masayoshi Son, can I have some severance?”

Mr Neumann was the main subject of ire from staff, but some complaints were also pointed at the pair of men who replaced him as CEO last month: “Seriously, where’s the email from our co-CEOs or whoever’s running the company now?”

Bloomberg

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