WeWork Adam Neumann removal, CEO’s Ouster Is Weighed in Bid to Salvage IPO.
SoftBank Group’s Masayoshi Son is in favor of removing WeWork’s Adam Neumann as CEO, as the company’s directors plan to meet as soon as this week to propose Neumann step down, according to a person familiar with the matter. Spokesmen for both SoftBank and WeWork declined to comment.
While the details of a board meeting haven’t been scheduled, at least some members of the WeWork board that aren’t affiliated with SoftBank are aligned with Neumann to keep him as CEO, said two people familiar with the matter who asked not to be named because the discussions are private. SoftBank and its associated Vision Fund is WeWork’s largest external shareholder.
WeWork views Son’s move against Neumann as an effort to prevent the company from going public, one of the people said. If WeWork doesn’t go public, it would prevent a writedown for SoftBank after valuing the company at $47 billion earlier this year. WeWork has had trouble getting a valuation of more than $20 billion with potential public investors, CNBC has reported.
Still, SoftBank views the writedown as both small in size and significance and believes a change in leadership would be for the long term health of the company, according to someone familiar with SoftBank’s thinking.
The proposal follows a tumultuous week in which WeWork postponed its IPO roadshow, and an expose on Neumann in the Journal revealed he had once been forced to reschedule a private plane trip after the crew found marijuana. The CEO also expressed interest in becoming Israel’s prime minister and the president of the world, living forever, and becoming the world’s first trillionaire.
WeWork’s IPO filing revealed massive losses and an unusually complex governing structure that concentrated power in Neumann’s hands, investors balked and the proposed price of the IPO dropped to as little as $15 billion.
The company lost $1.9 billion last year and analysts expect that the company is on pace to run through its remaining cash on hand at some point next year.
There is a playbook of sorts for removing a controversial founder-CEO before going public. Benchmark Capital successfully orchestrated a shareholder revolt that ousted Travis Kalanick before Uber went public. SoftBank later bought a 15% stake in Uber which included a provision that Kalanick could not fill three board seats on his own, thus helping him maintain broader control of the company’s future.
It’s unclear if Benchmark is leading the effort to remove Neumann.
The board is expected to meet sometime next week and potentially discuss making Neumann WeWork’s nonexecutive chairman.
Removing Neumann is a difficult decision for Son, who has long believed in WeWork and Neumann’s vision to quickly expand the company.
According to the Journal, SoftBank was likely going to buy roughly $1 billion in stock in WeWork’s initial public offering, though that purchase wasn’t enough to keep the company’s listing on track.