Adam Neumann, the founder of the co-working network WeWork, left the company this fall with a severance package of nearly $1.7 billion, an amount that could be even higher if the troubled startup does make it to the stock exchange.
The fortune of departed startup WeWork founder Adam Neumann could grow by hundreds of millions of dollars if the company holds an IPO, the Financial Times reported, citing documents and knowledgeable sources. Neumann negotiated such terms with the company and its major shareholder, Japanese investment firm SoftBank, in October when he left WeWork. Under the terms of the agreement then, he received nearly $1.7 billion: an option to sell his stake in the We holding company for about $970 million, $185 million to serve as WeWork’s exclusive consultant for the next four years and, finally, a $500 million loan.
If WeWork does an IPO, the “severance package” could become even more significant. The deal renegotiated the terms of the share class owned by Neumann, which emerged after the company restructured this year. They assume income from the startup’s future growth. A WeWork listing, even at a price well below what was expected before the crisis, would still bring Neumann hundreds of millions of dollars if the businessman decides to sell his stake, the FT points out.
The collapse of WeWork began after the company’s IPO failed. Investors’ valuation of the startup plummeted from $47 billion to $8 billion in just a few weeks, the startup was on the verge of bankruptcy. SoftBank had to spend $3 billion to buy back control and take over. The head of the company, Masaesi Son, admitted that he overestimated the startup’s value, did not notice problems with corporate governance and turned a blind eye to many things.