WeWork Pays Another $245M To Former CEO Adam Neumann To Clear Last Obstacle To SPAC Deal

Executive-severance experts said the package stands out not only for its enormous size, but also given Mr. Neumann’s record. The valuation of WeWork, which he co-founded in 2010, fell to around $8 billion when he left from $47 billion in early 2019. In all, WeWork has raised more than $11 billion to build a company worth $7.9 billion, not including debt.

“Generous would be an understatement,” said Conor Callahan, a management professor at the University of Illinois at Chicago who studies severance packages. “It’s going to be something people are going to be very upset about.”

But Callahan added that Neumann’s 10-to-1 voting rights enjoyed by his shares gave him a level of control enjoyed by few others. WeWork also signed deals to cancel leases in buildings partly owned by Neumann.

As we noted above, Neumann’s $245 million stock award was part of a renegotiated version of an early 2019 agreement initially meant to encourage Neumann to boost the company’s valuation. This type of an award, called a profits interest, is similar to a stock option and gives Neumann gains above a certain minimum share price. As of his late 2019 deal, the package gave him any gains above $19 a share.

But as part of his renegotiation, Neumann managed to change that minimum share level to $0, which means he will get the full amount so long as BowX’s shares remain above their current level. But if the share price falls below $10, Neumann will become ineligible for any reward.

Neumann isn’t the only one walking away from the talks with a massive nut: His lawyers are reportedly entitled to $50M of his profits in accordance with their fee.

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