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Some WeWork board members are seeking to remove Adam Neumann as CEO

One block of WeWork directors plans to push forward

Adam Neumann

After a tumultuous week in which his eccentric behavior and drug use came to light and the startup delayed the eagerly awaited listing, he resigned as managing director.

A group to which officials were also bound

Softbank Group

9984 0.17%

the company's largest investor, would like Mr. Neumann to give up his title as CEO of We Co., the parent company of the office clearing company, said the matter.

The board is expected to convene this week and possibly consider a proposal for Mr. Neumann to become the chairman of We's non-executive, some of the people said. That would allow him to stay in the company he has built into one of the most valuable startups in the country, but take new leadership to pursue an IPO that would bring us the money it needs to to maintain its rapid growth.

The company burned more than $ 2 billion in 201

8 and analysts have predicted that we will go over what we have ahead of us on our current path next year.

Any coup attempt is a gamble: Mr. Neumann still has allies under the directors and the ability to fire the entire board thanks to stocks he controls and the additional votes. But SoftBank, which has invested more than $ 9 billion in the company and is on the board, has significant influence, and we need the Japanese conglomerate to continue to pump cash.

It was not clear how it all works We directors – there are seven, including Mr Neumann – agree and the situation is fluid.

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The patience of SoftBank was put to the test. At the beginning of this year, We bought 47 billion US dollars worth of stocks, a value that now looks completely exaggerated. As we prepared to list the shares earlier this month, the company's expected valuation had dropped to about a third.

Despite this discount, we have had to defer supply as criticism of the company's management and financial losses has grown – $ 1.6 billion last year, and continued to grow despite rapid revenue growth.

The Wall Street Journal reported last week that Mr. Neumann had taken marijuana on a flight from New York to Israel, and asked the owner of the jet to recall the aircraft. The revelation increased concern about Mr. Neumann's leadership style and the dealings with the company that made him rich.

We had already made changes to corporate governance to win over reluctant investors. On Sept. 13, the potency of Mr. Neumann's regulatory stock – and he was still in control – as well as his wife's role in corporate matters, decreased and returned his controversial sale of a "We" brand to the firm. [19659005] Some SoftBank executives were worried for a long time about We's rising rating and Mr. Neumann's unusual behavior, even though they continued to give him money. SoftBank was expected to buy shares worth up to $ 1 billion as part of We's initial public offering. This is a large part of the approximately $ 3 billion that should be raised by investors. This commitment was not enough to keep the listing up-to-date, although we promised to do so this year.

Softbank CEO

Masayoshi Son

has long been a vocal advocate of We and Mr. Neumann, who, like him, is seen by many as a visionary. Mr. Son told CNBC in March that despite the concerns of some of his own investors, he still wants to invest more in the company. SoftBank has invested directly and through the Vision Fund in We, a pool of $ 100 billion it raised in 2017.

The $ 4.4 billion Investment in the Vision Fund in 2017 was approximately $ 20 billion. When the Fund's biggest investors, two Middle Eastern governments, threatened to stumble into investing last year, SoftBank stepped in and provided $ 4 billion at a valuation of $ 47 billion.

Mr. Neumann would not be the first startup founder to be forced by controversy.

About Technologies


Travis Kalanick

was ousted by its board in 2017 after the trucking company was widely criticized for a chauvinist and toxic work culture. Uber went public this spring with a new executive appointed from outside.

Write to Maureen Farrell at [email protected], Liz Hoffman at [email protected], Eliot Brown at [email protected] and David Benoit at david. benoit @ wsj. com

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