- WeWork CEO Adam Neumann reportedly made millions of dollars by renting office space in buildings that he partially owns to his company, according to a Wall Street Journal report on Wednesday.
- In a filing for prospective investors last year, WeWork reportedly disclosed that it paid $US12 million in rent between 2016 and 2017 to buildings “partially owned by officers” of WeWork.
- Investors told The Journal that they’re concerned that the situation creates a conflict of interest – if those buildings were to raise their rents, Neumann could stand to benefit.
- WeWork told Business Insider that Neumann has a stake in only four properties from which it leases space, out of the 400-plus coworking spaces the company operates globally, and the company said its board and investors are both fully aware of the situation.
WeWork, the coworking company said to be valued at $US47 billion, has been renting space in buildings partially owned by its CEO Adam Neumann, according to a Wall Street Journal report on Wednesday – an arrangement that’s netted the executive millions of dollars.
Multiple WeWork investors told The Journal that the arrangement was concerning to them, as the situation creates a potential conflict of interest for Neumann. For example, if those buildings were to raise WeWork’s rent, Neumann could personally profit. WeWork’s business model involves leasing large amounts of office space, and then subleasing smaller chunks of that space out to individuals, startups, and smaller groups.
In a document for prospective investors last year, the company disclosed that it paid $US12 million in rent between 2016 and 2017 to buildings “partially owned by officers” of WeWork, and said it will pay more than $US110 million over the lifetime of those leases, according to the report.
Neumann has a 50% stake in an 11-story New York City building where WeWork operates a coworking space, according to the report. The Journal also reported that Neumann is the “main investor” in a group that buys multiple properties in San Jose, California, some of which are leasing space to WeWork.
A spokesperson for WeWork told Business Insider that Neumann has a stake in only four properties from which the company operates, out of its network of 400 coworking spaces globally. Furthermore, the company said everything has been disclosed to investors and approved by the board, adding that it hasn’t heard complaints.
Of note, however, is that, in a 2014 fundraising deal,Neumann was awarded enough equity in the company to exert voting control over its board of directors. While WeWork’s board mainly consists of independent directors, Neumann’s vote is enough to make or break any proposal.
Read the full Wall Street Journal report here.
Earlier this month, the coworking company announced it would be rebranding from WeWork to The We Company, which it said would better reflect company’s ambitions of moving beyond providing office space and pushing further into markets such as education or residential living.
The day before the rebranding was announced, WeWork lost out on a $US16 billion investment from the Japanese tech company Softbank, which decided to downsize its investment to $US2 billion.
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