WeWork’s Adam Neumann Resigns Amid IPO Pressures
Not long after the firm’s IPO delay, Neumann and his advisers motioned to ax the role, the company announced.
In the decision, Neumann’s voting shares will go from 10-to-1 to 3-to-1, dissolving his majority control of the company, according to news reports. The move follows an earlier slashing of his voting power from 20 votes a share to 10 votes a share.
WeWork’s board of directors appointed co-CEOs effective immediately, who include Artie Minson, former co-president and chief financial officer, and Sebastian Gunningham, a former Amazon.com Inc. executive and a We Co. vice-chairman.
Longstanding red flags about the company’s inflated valuations, lack of profitability and Neumann’s leadership brought the curtain down. Not long after the firm’s IPO delay, Neumann and his advisers motioned to ax the role, the company announced.
In a prepared statement Neumann said, “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.”
Earlier Neumann had expressed reluctance to water down his reign as CEO at the co-working firm, demonstrated by his then iron grip on the firm’s corporate governance structure. However, it didn’t take long after WeWork’s parent We Co. unveiled its IPO filing mid-August for Neumann’s fortunes to reverse.
A firestorm of criticism surrounding the 40-year-old CEO sparked concern from the public markets and its largest backer SoftBank Group Corp., who allegedly pushed for his resignation, according to news reports.
Diminishing valuations put the demotion in play, as prospective and existing investors began to lose hope in the company’s future if it continued on in the same fashion. Recently, sources familiar with the firm’s valuations told newspapers it was considering a valuation between $10 and $12 billion, a giant step down from its $47 billion valuations it boasted nine months ago on the private markets.
What also didn’t go over well is the firm’s reported net losses for the past five years, which include $1.6 billion in 2018 and $689.7 million in the first half of 2019, according to an S-1 filing.
Days before Neumman’s departure, another high profile executive left the company, according to news reports. Wendy Silverstein, co-head of WeWork’s real estate fund, departed from the company, which was non-related to the IPO.