Top Line: Under increasing scrutiny from board members and investors, WeWork’s Adam Neumann is stepping down as CEO of the company, according to an announcement on Tuesday.
- The decision, first reported by The New York Times, was made during a lengthy board call. Neumann will stay on as a nonexecutive chairman on the board.
- WeWork will name two current executives, Artie Minson (formerly an exec at AOL and Time Warner Cable) and Sebastian Gunningham (formerly an Amazon exec) as interim co-chiefs while it searches for Neumann’s permanent replacement.
- WeWork had delayed its IPO last week, after reducing its estimated market valuation to as low as $10 billion, down from $47 billion in January.
- Investors—and particularly the company’s key shareholder, Softbank, had expressed concern over WeWork’s mounting losses, imbalanced corporate governance and Neumann’s unusually large degree of control over the company (through special voting shares).
- Softbank has invested over $10 billion in WeWork, but a rift developed over Neumann’s erratic leadership style between Neumann and Softbank’s chairman, Masayoshi Son, who reportedly led the charge to remove the divisive CEO.
- Neumann will cede majority control to WeWork’s parent, the We Co. His voting shares will be reduced from 3-to-1 to 10-to-1, according to The Wall Street Journal.
Crucial quote: Neumann said in a press release, “As cofounder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade. . . . While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive.”
What to watch for: The decision to remove Neumann is the company’s biggest step to address investor and shareholder concerns as it proceeds with IPO plans. It remains to be seen whether the under-fire CEO’s departure will boost WeWork shares.Follow me on Twitter or LinkedIn. Send me a secure tip.