By Thornton
The biggest, most outrageous golden parachute in history could get even bigger.
WeWork’s ex-chief executive Adam Neumann — whose $1.7 billion exit package in October sparked protests from thousands of workers who are facing pink slips as the company implodes — quietly negotiated deals this summer that could enlarge his severance beyond $2 billion, according to a report.
A corporate restructuring this summer ahead of WeWork’s botched IPO attempt quietly reclassified the company as an LLC, protecting Neumann’s future shares from taxes at the expense of creating value for future shareholders, according to documents seen by the Financial Times.
As part of that switch, Neumann also became entitled to a class of stock called “profits interests,” which are essentially free shares that vest if a public company’s value hits a pre-set target known as a “catch-up price.”
When everything fell apart a few months later, Neumann agreed to give up some of his profits interests if SoftBank would substantially lower the catch-up price on what he was allowed to keep, the FT reported late Monday.
At the time, a WeWork IPO looked impossible and Neumann’s profits interests appeared worthless. But after aggressively slashing costs under new management, some insiders believe there’s now a chance it could finally go public.
If WeWork — whose valuation got slashed to $8 billion from $47 billion in an October funding round led by Softbank — hit a $15 billion valuation in the public markets, Neumann’s profits interests would give him an additional $352 million worth of stock, according to the FT report.
Meanwhile, WeWork employees are still reckoning with the chaos Neumann left in his wake. This week, the company filed updated paperwork with the New York State Labor Department disclosing that it now intends to lay off 423 people in New York alone in early 2020. That number is up from the 414 figure WeWork announced back in November.
