The co-founder and former CEO of WeWork, Adam Neumann, is going to pick up an extra $ 50 million windfall and other benefits as part of a bitter dispute that he and other early investors in the shared office space provider with SoftBank fed, would fix. Group Corp., according to people familiar with the matter.
As The Wall Street Journal reported earlier this week, the parties are entering into an agreement in which SoftBank, the majority shareholder of WeWork, would buy about $ 1.5 billion worth of shares from other investors, including nearly $ 500 million from Mr. Neumann. That’s about half as much as it was previously planned to buy.
But part of the deal that was not previously reported distinguishes Neumann from other shareholders. It asks SoftBank to give the 41-year-old the special payout of $ 50 million and extend a $ 430 million loan he made to him at the end of 2019 by five years, people said. SoftBank will also pay $ 50 million for the legal costs of Mr. Neumann paid. It is not clear how much it will pay for the legal costs of the other shareholders.
The settlement between SoftBank, Mr. Neumann and the other shareholders are not final, and the terms may still change, people warn. If the parties reached an agreement in the next few days, a hearing would take place in early March.
WeWork is negotiating separately for a combination with a specialty acquisition company called BowX Acquisition Corp. which would give the startup a public listing, people familiar with the discussions said. While the talks may still fall apart and other options be considered, WeWork and BowX could reach an agreement as early as next week, some people said.
The month-long legal skirmish is about a commitment that SoftBank made in October 2019 to buy $ 3 billion worth of existing WeWork shareholders, including nearly $ 1 billion from Neumann. SoftBank, which helped an insane WeWork after the planned stock market crash collapsed, also agreed to pay a $ 185 million four-year consulting fee to Neumann, who agreed to step down as chairman and CEO. In addition, it lent him nearly $ 500 million to refinance another loan.
The extra payment to mr. Neumann could reopen old wounds at WeWork employees and investors, which was furious when the $ 185 million payout became known.
Employees to whom Mr. Neumann had long preached an “us about me” ethos, was amazed at the contrast between his retirement package and their personal financial situation. Most had stock options that became virtually worthless as the value of WeWork dropped from $ 47 billion to about $ 8 billion.
Mr. Neumann never received the full amount of the consulting contract. The people said: SoftBank paid him about $ 130 million before he went on strike in the middle of the legal battle.
When the coronavirus pandemic dominated the US, April last week SoftBank refused to continue with the payment of $ 3 billion. It cites the terms of the deal, which he said were not finalized, including the restructuring of a subsidiary in China. WeWork shareholders, represented by early WeWork investors on the board, and Mr. Neumann has filed separate lawsuits, and the parties have traded legal action for most of the past year.
The nearly $ 500 million in inventory that Neumann will sell represents about 25% of its holdings. The people familiar with the matter say the price per share he gets is about the same as in the previous agreement.
Write to Maureen Farrell at [email protected] and Eliot Brown at [email protected]
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
In the print issue of February 25, 2021, ‘WeWork Ex-Boss to Get Windfall’ appears.