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Burgess COMMENTARY Peter Burgess | ||
WeWork's Adam Neumann Will Get an Eye-Popping $1.7 Billion Exit Package After Tanking the Company
Golden parachutes don't get more golden than this.
adam neumann of wework Kelly Sullivan
The odyssey that WeWork has gone through in the last year reads like a lot like a rejected plot line for HBO's Silicon Valley. The start-up provides shared office spaces across the country, and for a minute it was the most valuable startup in the world, earlier this year pegged at an astronomical $47 billion despite operating at a loss in 2018. When WeWork filed papers to go public, there were red flags galore, including the immense amount of control that founder and CEO Adam Neumann had over the company. The backlash from investors was so swift that in short order Neumann stepped down as CEO in September, and now, rather than going public at all, the Japanese telecommunications giant SoftBank Group will take control of the beleaguered company.
Neumann has been one of his company's biggest headaches. He's made bizarre public statements like saying he wanted to live forever, become president of the world, and that he aspires to be history's first trillionaire. He apparently left a cereal box stuffed with so much marijuana on a private plane that the crew called the plane's owner, who ordered them to fly back without Neumann for fear of being involved in international drug smuggling. His wife, who also works for WeWork, reportedly once had an employee fired because she didn't 'like their energy.' Neumann also paid $5.9 million for the rights to the word 'we,' and, on top of everything else, the share structure of the company gave him complete control even after his death.
Since Neumann is a walking risk vector, SoftBank is minimizing his relationship with the company he founded. The Japanese company will reportedly buy WeWork for $8 billion, according to the Wall Street Journal, and, in exchange for greatly diminishing his voting power, Neumann will make out like a bandit. The deal involves SoftBank buying about $1 billion worth of stock from Neumann, as well as extending him about $500 million in credit and paying him $185 million in consulting fees. Credit included, Neumann will be walking away with about $1.7 billion.
That's a rather shocking pay day for someone who's almost single-handedly responsible for running the company into the ground after admitting to drug benders. Cushy deals for executives with questionable records are far from uncommon—the bonuses for Goldman Sachs executives after the 2008 financial crisis is one of the most famous examples. Even more scandalous is a detail on Neumann's golden parachute in the very last line of the Journal's article: 'WeWork also has been planning to cut thousands of employees, but delayed the layoffs earlier this month because it couldn’t afford the severance costs, people familiar with the matter have said.'
While SoftBank is shelling out nearly $2 billion to Neumann just to be rid of him, WeWork is trying to save up enough money for massive layoffs. There's probably no better, more literal example of the wild disparity between a company's executives and the people who actually keep it running. No matter how badly someone at the top screws up, they walk away with a nine-figure check, while the costs of the mess they made slide down the corporate ladder.
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| October 22, 2019 The text being discussed is available at | https://www.gq.com/story/wework-adam-neumann-golden-parachute and |