WeWork will name two current execs, Sebastian Gunningham and Artie Minson, as co-CEOs. Neumann's voting power will drop to three votes per share.
- Adam Neumann is stepping down as WeWork's CEO, citing intense public scrutiny that has become a distraction in running the firm.
- WeWork said it would name two current execs, Sebastian Gunningham and Artie Minson, as permanent co-CEOs.
- Minson, WeWork's copresident and chief financial officer, joined the company in 2015 from AOL. Gunningham left Amazon last year to become WeWork's vice chairman.
- Neumann will stay on as chairman, and his voting power will drop to three votes per share from 10 votes.
- The company's biggest backer, several other investors, and some board members were reportedly plotting to remove Neumann as CEO after the flexible-office company postponed its initial public offering amid concerns about its business model, valuation, and governance.
- Read more WeWork news here.
Adam Neumann is stepping down as CEO of WeWork, with the coworking giant's controversial chief and cofounder citing intense public scrutiny that became a distraction in running the company.
WeWork this month delayed its highly anticipated public offering after mulling a huge valuation cut to lure investors spooked by its wide losses and unconventional corporate governance.
WeWork said in a statement on Tuesday that it would name two current execs, Sebastian Gunningham and Artie Minson, as co-CEOs. Neumann will stay on as chairman.
Adam Neumann's voting power will drop to three votes per share from 10 votes, a source familiar with the matter told Business Insider.
"While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive," Neumann said in the statement.
Minson, WeWork's copresident and chief financial officer, joined the company in 2015 from AOL. Gunningham last year left Amazon, where he was a senior vice president of seller services for more than a decade, to become WeWork's vice chairman.
Board members were reportedly mulling how to push out the WeWork cofounder and controversial CEO after the company delayed its initial public offering amid concerns about its business model, valuation, and governance.
Neumann founded WeWork with his wife, Rebekah, and the architect Miguel McKelvey in New York in 2010. Since then, the company has expanded to 528 locations in 29 countries. WeWork, now known as The We Company, ushered in a new way to think about designing and leasing office space — but it remains far from profitable.
In an S-1 filing last month, the company estimated the market opportunity for its business at $1.6 trillion but said that in the first half of 2019 it lost $690 million on $1.5 billion in revenue.
That filing also detailed Neumann's web of loans, real-estate deals, and family involvement with the company. Over the past month, the company worked to address some of those issues, but its unusual governance and concerns about its resiliency in an economic downturn were still a red flag for some investors.
The company was said to have considered drastically slashing its IPO valuation to as low as $10 billion, well below the private valuation of $47 billion it secured in January. It would also need to raise $3 billion in a public offering to unlock a $6 billion bank-financing package.
The S-1 filing said Neumann did not earn a salary and would not be entitled to severance if he were no longer CEO. In the first half of 2019, WeWork granted Neumann options on common stock that would vest based on a successful IPO and the company hitting a certain market capitalization, up to $90 billion.
Investors had proposed ousting Neumann by leveling legal threats at him over "self-dealing," The New York Times said. Neumann holds stakes in companies that have bought properties and then leased them to WeWork, giving him conflicting incentives as both landlord and tenant.
Other shareholders were calling for an inquiry into Neumann's use of company money and whether he took drugs while working, The Times said. The Wall Street Journal last week recounted claims from anonymous sources that Neumann smoked marijuana on a private flight from New York to Israel. They told The Journal that the jet's owner recalled the plane after the flight crew discovered more of the drug stuffed in a cereal box for the return journey.
The We Company declined to comment on the drug allegations. A spokeswoman declined to comment on this story to Business Insider.
After an overhaul of its governance failed to relieve investors' concerns, the company faced the prospect of not raising the $3 billion needed to unlock the $6 billion in bank financing, leaving it with little choice but to delay its public debut.
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