Former WeWork CEO Neumann Won't Give Part of His $1 Billion to Laid-Off Workers
The bailout of mammoth temporary office space rental phenom WeWork has been put into place. Its largest shareholder, Softbank, will take control. Through a series of loans and equity purchases, it will put as much as $9.5 billion into the company and will own 80%. WeWork founder and former CEO Adam Neumann will get $1.7 billion for many of his shares in WeWork. Close to $1 billion of that will come as a lump sum payment. Apparently, he will not be giving any of that to the 2,000 to 3,000 people WeWork will lay off in the next several weeks. He can, obviously, afford to.
Neumann will not be the first chief executive to get a sweet package after mismanaging a company and being pushed out the door. He can claim, fairly, that he founded and built up WeWork through its early years. It is not his fault that Softbank’s earlier investments pushed up the value of WeWork to $47 billion at the start of this year. He does have to take responsibility for a business model, based on massive losses, and that his poor governance was astonishing. Neumann had friends and family in high positions at WeWork. He owned some of the buildings it leased.
Many of the WeWork employees who will be fired have low-level jobs, which means their compensation is nowhere near six figures. WeWork may not be among the American companies that pay their workers the least. Many WeWork employees were given stock options that are now underwater and useless financially. The options are certainly among the reasons these people joined. Like Softbank, they thought WeWork would be worth well more than the current $8 billion figure.
It is probable that a job at WeWork does not qualify most of its laid-off workers for other jobs that have high pay. In the current economy, they probably will find work, but not with stock options that eventually might be worth something. Their WeWork options probably will be the only chance many will have to make a large sum in a short time.
WeWork has not announced what the severance will be for laid-off workers. If most layoffs are an indication, it will be a few weeks. Many of the people who leave will need more money than that to bridge them to their next jobs. Neumann has enough money to help, but he won’t.