WeWork details CEO Adam Neumann's web of loans, real estate deals, and family involvement with the company
- WeWork's co-founder and CEO Adam Neumann has faced criticism for his various ties with the company in the past, including having stakes in buildings that WeWork rented.
- The company's paperwork released Wednesday ahead of a planned initial public offering gives a closer look into the financial and familial links between Neumann, WeWork, and some of the banks the company works with.
- To avoid possible conflicts, Neumann has agreed not to buy more properties that could be leased to WeWork.
- The document also lays out unusual agreements with Neumann's wife, Rebekah.
- Read all of BI's WeWork coverage here.
Adam Neumann, co-founder and CEO of The We Company, has been criticized in the past for perceived conflicts of interest between his investments and WeWork.
The company's paperwork for its planned initial public offering shows that WeWork has taken steps to address the CEO's entanglements when it comes to real estate, but it also shed light on Neumann's other personal ties.
In January, the Wall Street Journal reported that Neumann had made millions by leasing a handful of buildings that he owns back to WeWork. At the time, a spokesperson said that all transactions involving WeWork executives go through a committee for review. These transactions were listed as a risk factor in Wednesday's filing, which noted that Neumann bought the buildings "in order to help prove WeWork as a viable tenant to landlords."
Going forward, WeWork said "our board of directors and Adam wanted to not only ensure the absence of any actual conflict of interest, but also avoid the appearance of any conflict of interest in relation to any of Adam's personal real estate investments."
To do that, Neumann agreed that WeWork's real estate investment arm, ARK, will manage his stake in 10 properties, including the four that rent to WeWork. After a year, if ARK has not sold the four WeWork-leased buildings, it would then need to do so.
Neumann also agreed not to buy properties in the future that would do business with WeWork.
Any future related-party deals require either the unanimous consent of WeWork's audit committee or the approval of a majority of the board of directors.
The company also loaned millions of dollars to Neumann and other executives over several years. WeWork loaned $7 million to Neumann in June 2016, which he paid back in full in cash in November 2017.
It had also issued loans to top executives and board members Lew Frankfort, Jen Berrent, and Artie Minson in the amounts of $6.3 million, $5.2 million, $4.6 million, and $3 million respectively. All of the loans have been repaid, but approximately $0.6 million of the loan to Minson was forgiven.
The company also issued loans to We Holdings LLC, of which Neumann is a managing member, for $10.4 million in May 2013 and $15 million in February 2014. We Holdings LLC is a related entity of the We Company, not a subsidiary.
Neumann also has a personal line of credit of up to $500 million with UBS, JPMorgan Chase, and Credit Suisse, which is secured by shares of the We Company's Class B common stock he owns.
In addition to his financial ties, Neumann has several family members working at the company, some more intimately involved than others. His wife and co-founder Rebekah has been his "strategic thought partner" since the company's founding. She now serves as the company's chief brand and impact officer and founded the school WeGrow. She has not been paid a salary.
In the Wednesday filing, WeWork said that if Adam Neumann can't serve as CEO in the decade following the IPO, a committee comprising two members of the board of directors and Rebekah Neumann would choose a new CEO. If she can't serve on the committee, the trustee for the couple's estate would serve in her place.
Adam Neumann also has siblings who have done business with the company. His sister Adi hosted eight events for the firm's annual Creator Awards last year, and she was paid less than $200,000, per the filing. His brother-in-law, Avi Yehiel, has been the company's head of wellness since 2017. He's paid less than $200,000 a year, the filing said.
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