Neumann received cash, stock awards and fees worth nearly $ 450 million in a settlement that has been the subject of tense negotiations since he was forced to leave the company from co -working as CEO in 2019, after an unsuccessful attempt at an initial public offering.
With WeWork aiming for a second execution in an IPO, this time via a merger with a blank check company, the deal is an attempt to break with the past. SoftBank sees the high cost as a reasonable price to pay for “putting the Neumann era behind them,” said a person familiar with the negotiations.
SoftBank made a $ 1.6 billion exit package with Neumann in 2019, but in April 2020 it pulled out of a take-over bid for WeWork stock that would have grossed nearly $ 1 billion. dollars of that amount. Neumann and two independent directors sued SoftBank in response, but the two sides settled the dispute in February.
The final settlement, details of which emerged in regulatory filings earlier this month and were first reported by The Wall Street Journal, includes a cash payment from SoftBank and its affiliates of more than $ 105 million. dollars, nearly half of which is expected to cover Neumann’s legal fees. .
The documents, filed with the Securities and Exchange Commission before the company’s merger with special purpose acquisition company BowX Acquisition, also detail a deal that could assert Neumann’s so-called “beneficial interests” to nearly $ 250 million.
SoftBank reduced the strike price of Neumann earnings interest units, which are similar to stock options, allowing it to reap gains if WeWork is successful in listing them and BowX shares trade above of $ 10.
The settlement also confirms that SoftBank paid $ 92.5 million to Neumann as part of an advisory deal in 2019. We Holdings, an investment vehicle controlled by Neumann, also sold for $ 578 million of WeWork shares at SoftBank.
The Japanese group, led by billionaire CEO Masayoshi Son, has done more than any other investor to propel WeWork’s extraordinary growth. Fueled by its investments of more than $ 10 billion, WeWork’s valuation soared to $ 47 billion as it approached its attempted listing two years ago, making it one of the most successful start-ups. most popular in the world.
But the relationship between SoftBank and Neumann has deteriorated over WeWork’s financial performance and the eccentricities of the co-founder’s management style.
The company’s valuation fell to $ 8 billion in the months following the initial IPO attempt, before SoftBank offered a bailout. WeWork continues to suffer heavy losses: The Financial Times revealed last week that the company lost $ 2.1 billion in the first three months of this year.
SoftBank, WeWork and a spokesperson for Neumann declined to comment.