WeWork co-founder and former Chief Executive Adam Neumann is expected to pull in an additional $50million on top of other benefits as part...
WeWork co-founder and former Chief Executive Adam Neumann is expected to pull in an additional $50million on top of other benefits as part of his agreement with SoftBank Group Corp.
People familiar with the matter say that the deal sets Neumann apart from other WeWork shareholders, the Wall Street Journal reports.
The deal calls for SoftBank to shell out the $50million payout to the 41-year-old and also extend a $430million loan it had given him in late 2019 by five years, according to sources familiar with the matter.
Additionally, Neumann's $50million in legal fees will also be paid by SoftBank. It is currently unknown how much SoftBank will pay in legal fees for other shareholders.
It would see Neumann take an almost $500 million pay cut in his payout from the shared-office-space company's new owner, SoftBank which was to buy back some of his shares
Japan's SoftBank Group CEO Masayoshi Son headed the tech group's bid for WeWork
Terms for the settlement can still change, sources told the WSJ. But if the deal is met within the next few days, then the parties could possibly avert the early-March trial.
The original terms of the offer would have seen SoftBank purchase $1bn of Neumann's shares in WeWork but now that deal has been cut in half to just $500million.
The high-profile settlement would put to rest a prolonged legal battle between Neumann and the tech company, which dates back to 2019 when WeWork's IPO plans fell apart.
It would also clear the decks for WeWork as it pursues talks to go public through a merger with a special purpose acquisition company (SPAC).
WeWork co-founder and former Chief Executive Adam Neumann, pictured, is said to be in advanced talks to settle a high-profile legal fight with SoftBank Group Corp.
SoftBank, which poured more than $13.5 billion into WeWork, was pulled into a legal dispute with directors at the company after backing out of a $3 billion tender offer agreed to when it bailed out the office-sharing firm following a flopped IPO attempt.
In October 2019 SoftBank agreed to purchase around $3 billion in WeWork stock belonging to Neumann as well current and former WeWork employees. SoftBank later contested its obligation to purchase the shares.
Under the new proposed terms, SoftBank would spend about $1.5 billion to buy shares of early WeWork investors and employees, including $500 million to buy Neumann's shares.
The purchase of the shares would be around half the number it had originally agreed to buy.
The talks were reported earlier by the Wall Street Journal. SoftBank declined to comment. WeWork was not immediately available for comment, the site reported.
Neumann was once seen as a star of the business world after WeWork's annual revenue rocketed to $1billion.
The company supplies shared office space, an internet connection, cleaning service and a reception desk, making making it popular with small firms and tech startups.
WeWork spent months in 2019 preparing for an initial public offering after receiving a valuation of $47billion, but eventually had to scrap it as the firm hemorrhaged money and estimates of its value fell by tens of billions of dollars.
Neumann stepped down as CEO of WeWork in the wake of the failed IPO launch
The company told shareholders it had lost almost $1.3billion in the third quarter of 2019, before WeWork was eventually bought out by SoftBank for more than $10billion.
The firm subsequently announced it was laying off around 2,400 employees worldwide, around a fifth of its workforce.
After WeWork's attempt to go public was derailed by questions about corporate governance and massive ongoing losses, Neumann stepped down from WeWork's board of directors with what was described at the time as a $1.7billion exit package, having voted to oust himself at the decisive meeting.
A source said Neumann would get $1billion for shares, $500million for reimbursements of personal debts and $185million in consulting fees.
However, SoftBank said in April 2020 that it would not go ahead with the $3billion offer to shareholders.
Questions also arose about Neumann's lifestyle and eccentric methods of corporate governance, including his ownership of some of the firm's rental properties.
Neumann's former chief of staff Medina Bardhi accused him and the company of discrimination, saying she feared for the health of her unborn baby because of Neumann's penchant for smoking marijuana on chartered planes.
She also said she was replaced by a man making more than twice her salary when she took maternity leave. WeWork said it would contest the claims.
A new book released last October also detailed Neumann's booze-fueled antics as head of the troubled start-up.
In August 2018, he treated himself to an alcohol supply that 'could have covered most of an entry-level WeWork salary' during a lavish company retreat, according to Billion Dollar Loser: The Epic Rise and Fall of WeWork by Reeves Wiedeman.
The three-day retreat near London included a performance by Lorde and motivational speeches by Deepak Chopra, Wiedeman wrote.
While every other attendee slept on an air mattress in a tent, Neumann and his wife, Rebekah, slept in a 'tent-house suite' with A/C and heating, a king bed and four twin beds, several fridges, fire bowls and eight picnic tables.
Marcelo Claure (above), who took over as WeWork's executive chairman after Neumann's ouster under investor pressure last year, said Neumann's original lucrative deal was scuttled
WeWork's current executive chairman Marcelo Claure told the Financial Times last year that the firm was set to have a positive cash flow during the fourth quarter of 2021.
Claure said demand for small, flexible offices had been on the rise since the coronavirus pandemic and resulting economic crisis.
'In order for WeWork to be profitable, we need to exceed 67 percent to 68 percent occupancy, and pre-pandemic we were at 80 percent to 85 percent occupancy, so all we need to do is come back to similar levels of occupancy,' he said.
Some tenants had refused to pay rent during the pandemic, but Claure said Mastercard, ByteDance, Microsoft and Citigroup had all recently signed lease deals with WeWork.
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