WeWork’s new chairman is defending a $1.7 billion payout to co-founder and former CEO Adam Neumann amid looming layoffs, while emphasizing that the company now faces "zero risk" of bankruptcy.
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Marcelo Claure told employees that Neumann, like any investor in the company, had a right to sell his shares, according to an audio recording of a meeting with employees obtained by Reuters. “There’s a level of gratefulness that we’re going to have for Adam because he’s the one who built this business," he said.
WeWork didn't immediately respond to a request for comment from FOX Business.
Neumann's payout is part of a financial rescue package that hands control of the company to Japanese tech giant SoftBank and abandons the more grandiose of the former CEO's plans.
The takeover values WeWork at $8 billion, a fraction of the $47 billion valuation that SoftBank had assigned the company in its last round of financing in January.
“SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work,” SoftBank founder Masayoshi Son said in a statement. "WeWork is at the forefront of this revolution."
“Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support," he said. "We remain committed to WeWork, its employees, its member customers and landlords.”
The deal throws WeWork a lifeline as it attempts to turn around a money-losing business model that had lost favor with potential Wall Street investors.
WeWork has been scrambling for cash since its attempt to enter the stock market floundered last month, a stunning fall from grace for a company that until recently was considered one of the most highly valued start-ups in the U.S.
The Associated Press contributed to this report.