- SoftBank is taking control of WeWork, the company announced on Tuesday evening. As part of the deal, Marcelo claure, SoftBank’s chief operating officer, will replace former CEO Adam Neumann as chairman.
- WeWork previously delayed the timeline for its initial-public-offering plan amid a wave of criticism in recent weeks, including complaints over a deal under which the company paid Neumann $5.9 million for the use of the word “We.”
- WeWork’s board of directors includes former Coach, Goldman Sachs, and Uber officials, along with top private-equity and venture-capital executives.
- Visit Business Insider’s homepage for more stories.
Adam Neumann is officially off WeWork leadership’s team.
The former CEO will step down from the board of directors as part of a financing deal with SoftBank that will give the Japanese conglomerate control of the office-sharing firm, according to Tuesday announcement.
The board previously ousted Neumann, leaving control of the company to two executives. At the time, he still served as nonexecutive chairman of the office-sharing organization’s parent firm, The We Company. His voting power also dropped to three votes per share, down from 10 votes.
Now, Neumann will be replaced as chairman by Marcelo Claure, SoftBank’s chief operating officer.
Neumann will become a board observer, a position that comes with no voting rights. In the deal, however, he will receive nearly $1.7 billion from SoftBank, according to The Wall Street Journal, including a $500 million line of credit and a $185 million “consulting fee.” None of those details were outlined in the public statement.
Sebastian Gunningham, WeWork’s former vice chairman, and Artie Minson, the company’s former chief financial officer, replaced Neumann as co-CEOs on September 24, a decision made after “a lengthy” board call, The New York Times reported.
According to The Journal’s earlier reporting, the push to initially remove Neumann came from leaders tied to SoftBank, WeWork’s largest backer, which has invested over $9 billion into the company and has representation on the board. Other board members include former Coach, Goldman Sachs, and Uber officials, along with top private-equity and venture-capital executives.
The office-rental firm previously delayed the timeline for its initial-public-offering plan amid a wave of criticism in recent weeks, including complaints over a deal in which the company paid Neumann $5.9 million for use of the word “We.” That arrangement was reversed in September.
WeWork also made headlines when the firm revealed there were no women on its seven-member board of directors. The company quickly amended its federal filing to include one woman: Harvard Business School professor Frances Frei. In the filing, WeWork said it planned to add additional directors after the IPO to create a more diverse group.
Neumann’s dual removal comes after reports on his drug and alcohol use, including accounts of him smoking marijuana on a private flight to Israel.
Read more: Sex, tequila, and a tiger: Employees inside Adam Neumann’s WeWork talk about the nonstop party to attain a $100 billion dream and the messy reality that tanked it
WeWork previously adjusted its IPO filing to address investor concerns over how WeWork would be controlled after the public offering. Among them was a shift to give the board the power to remove Neumann. His wife — Rebekah Paltrow Neumann — was also removed from the CEO determination process.
Below are the board members’ connections to WeWork, plus some of their professional highlights.
SEE ALSO: 3 VC investors in flex-space startups slam WeWork’s governance and leadership as its valuation crumbles
Ronald Fisher is the vice chairman at SoftBank Group
Connection to WeWork: The 71-year-old founded SoftBank Capital, a US venture-capital firm owned by the Japanese conglomerate. He was added to the WeWork board after SoftBank’s $4.4 billion investment in 2017. The company holds nearly 114 million class A shares in WeWork, each of which carry one vote under the firm’s corporate-governance structure.
Professional highlight: Fischer is the former CEO of Phoenix Technologies, a software developer for personal computers.
Lewis Frankfort is the chairman of the fitness-studio chain Flywheel Sports
Connection to WeWork: Frankfort initially joined the board in 2014. WeWork has loaned him $6.3 million, according to federal filings, which he repaid with interest in May. Frankfort owns about 2 million shares, including nearly 750,000 class B shares owned by his family trust.
Professional highlight: Frankfort is the former CEO of Coach, a luxury clothing and accessory brand.
Bruce Dunlevie is the founding partner of the venture-capital firm Benchmark
Connection to WeWork: A longtime tech investor, Dunlevie joined WeWork’s board in 2012. His firm Benchmark invested $6.7 billion in eBay in 1997 and has provided funding to Twitter, Uber, Snapchat, and Instagram. Dunlevie owns nearly 33 million shares of WeWork.
Professional highlight: Dunlevie launched a personal-computer division at Everex Systems, a now defunct tech manufacturer. NewMarket Technology acquired 75% of the firm in 2008.
Harvard Business School professor Frances Frei
Connection to WeWork: Frei has consulted with the company on human-resources issues since earlier this year. She was added to the board after WeWork’s initial all-male board of directors drew intense public backlash.
Professional highlight: Frei previously served as senior vice president of leadership and strategy at Uber. She was hired to help lead a cultural transformation at the ride-hailing firm as part of an attempt to rebuild its reputation after allegations of a toxic and sexist workplace under former CEO Travis Kalanick. At Harvard, Frei teaches classes on leadership development, managing customer service, and how to create cultures of success in organizations.
Steven Langman is the cofounder of the private-equity firm Rhône Group
Connection to WeWork: Langman chairs WeWork’s ARK, a $3 billion real-estate investment fund the company launched in May. Rhône owns a majority of that joint venture, which built upon a prior investment-advisory group between the two firms. Langman owns 27,000 WeWork shares.
Professional highlight: Langman has long been involved in mergers and acquisitions. He worked in the department at Goldman Sachs and Lazard.
John Zhao is the chairman of the Chinese private-equity firm Hony Capital
Connection to WeWork: Zhao’s Hony Capital was one of the firms to help lead a $500 million funding round for WeWork China. The company has over $7 billion in assets. It has invested in the real-estate firm Chengtou Holdings and Jin Jiang International Hotels, China’s largest hotel group, among other organizations.
Professional highlight: Zhao is the executive vice president at Legend Holdings, the tech firm Lenovo Group’s parent company.
Mark Schwartz is the former head of Goldman Sachs Asia
Connection to WeWork: Schwartz joined the board of directors after SoftBank’s $4.4 billion investment. He was a SoftBank board member until May. At Goldman, Schwartz helped lead Alibaba’s record $25 billion public offering before retiring in 2016.
Professional highlight: Schwartz founded MissionPoint Capital, which focuses on clean energy and other environmental investments.