A SoftBank executive has said that WeWork founder Adam Neumann’s $185 million consulting deal was cancelled after he violated the agreement.
Marcelo Claure, who took over as WeWork’s executive chairman after Neumann’s ouster under investor pressure last year, made the remarks at a Wall Street Journal event on Monday.
‘I don’t think that consulting agreement is still in force,’ Claure said of the deal with Neumann. ‘I think Adam may have violated some of the parts of the consulting agreement, so that’s no longer in effect.’
Claure, a top SoftBank executive charged with rescuing that company’s investment in WeWork, declined to elaborate on how Neumann may have violated the agreement, saying it was the subject of pending litigation.
WeWork founder Adam Neumann’s (above) $185 million consulting deal was cancelled after he violated the agreement, a SoftBank executive says
Marcelo Claure (above), who took over as WeWork’s executive chairman after Neumann’s ouster under investor pressure last year, said Neumann’s lucrative deal was scuttled
Neumann was ‘incredibly helpful at the beginning’ in assisting SoftBank to understand WeWork, he added.
After WeWork’s attempt to go public last year was derailed by questions about corporate governance and massive ongoing losses, Neumann stepped down as CEO and resigned from the board.
Part of Neumann’s deal with SoftBank included a four-year non-compete agreement that is no longer in effect, a person familiar with the matter told the Journal.
Claure said that he expected WeWork to reach profitability some time next year.
‘In order for WeWork to be profitable, we need to exceed 67 percent to 68 percent occupancy, and pre-pandemic we were at 80 percent to 85 percent occupancy, so all we need to do is come back to similar levels of occupancy,’ he said.
Last week, an internal memo revealed that WeWork’s parent company, The We Company, was dropping the ‘we’ moniker to revert to its better-known name.
After WeWork’s attempt to go public last year was derailed by questions about corporate governance and massive ongoing losses, Neumann stepped down as CEO
The ‘we’ brand was introduced in January 2019 by WeWork’s co-founder, Adam Neumann, with the aim of broadening the shared office space business to a lifestyle company.
Neumann was widely criticized when the company disclosed he had trademarked the brand and received a $5.9 million payment from WeWork for its use.
A new book released on Tuesday detailed Neumann’s booze-fueled antics as head of the troubled start-up.
In August 2018, he treated himself to an alcohol supply that ‘could have covered most of an entry-level WeWork salary’ during a lavish company retreat, according to Billion Dollar Loser: The Epic Rise and Fall of WeWork by Reeves Wiedeman.
The three-day retreat near London included a performance by Lorde and motivational speeches by Deepak Chopra, Wiedeman wrote.
While every other attendee slept on an air mattress in a tent, Neumann and his wife, Rebekah, slept in a ‘tent-house suite’ with A/C and heating, a king bed and four twin beds, several fridges, fire bowls and eight picnic tables.
WeWork, which has been slammed by the coronavirus-induced recession along with many other businesses, has said it will become profitable by the end of 2021.
A new book released on Tuesday also detailed Neumann’s booze-fueled antics as head of the troubled start-up
The company hopes to benefit from corporations that are reducing their real estate footprint because of the pandemic and have looked to working from home and greater use of flexible workspace, which WeWork can provide with its global footprint.
WeWork in August said it had slashed its cash burn rate to $482 million in the second quarter, or almost in half from the end of 2019. The company also said it had obtained a $1.1 billion commitment in new financing from SoftBank.
WeWork withdrew its public offering in September 2019 that looked to value the company at $47 billion and make it one of the year’s hottest IPOs.
WeWork soon entered a tailspin as its valuation fell to less than $8 billion. After a management shake-up it remains enmeshed in lawsuits over a $3 billion tender offer to existing shareholders.