As WeWork, the beleaguered office-sharing startup, prepares to fire thousands of rank-and-file staff to cut costs, its board has agreed on severance packages for its co-CEOs if they leave, according to people with knowledge of the matter.
In the past week, WeWork’s board signed off on exit deals for Artie Minson and Sebastian Gunningham in the multimillion-dollar range, said one of the people, who requested anonymity because the agreements are private.
The severance arrangements were negotiated as SoftBank Group Corp. bailed out the company and on Tuesday named one of its executives, Marcelo Claure, as WeWork’s executive chairman.
For now, Minson and Gunningham are committed to WeWork, according to one of the people. They were appointed last month when co-founder and former CEO Adam Neumann stepped down following the company’s withdrawal of a planned initial public offering.
“As your co-CEOs, we are committed to working with Marcelo and SoftBank to position our company for long-term success,” Minson and Gunningham wrote in a memo to staff obtained by Bloomberg.
Late Tuesday, WeWork secured a $9.5 billion lifeline, and Neumann gave up his board seat. He is set to walk away with as much as $1 billion from the sale of WeWork stock, a $500 million credit line from SoftBank and a roughly $185 million consulting fee, people familiar with the matter have said.
WeWork delayed layoffs earlier this month because it couldn’t afford the severance costs, a person familiar with the matter said.
Representatives for WeWork and SoftBank didn’t immediately respond to a request for comment. SoftBank and WeWork plan to launch a CEO search, the New York Times and Axios have reported.
Meanwhile, WeWork will revamp SoftBank Group Corp.’s headquarters in Tokyo and potentially undertake similar projects at the Japanese conglomerate’s properties around the world, according to newly appointed Executive Chairman Marcelo Claure.
In a memo to employees Wednesday, Claure said he knew “firsthand the power of the WeWork brand and the quality of our product” because the troubled office-sharing company had “reimagined” the headquarters of Sprint Corp., where the SoftBank executive also serves as chairman.
“Now WeWork will be doing the same at our headquarters at SoftBank in Tokyo,” Claure said in the memo, which was obtained by Bloomberg. “Furthermore, I am committed to do the same across all SoftBank properties around the world, including some of our leading portfolio companies.”
SoftBank, already WeWork’s largest shareholder, now controls 80% of the struggling startup after a $9.5 billion bailout that was announced late Tuesday. WeWork, reeling since it scrapped an initial public offering last month, was set to run out of cash as early as next month.
In the memo, Claure thanked the company’s staff for “staying strong throughout the crisis” and acknowledged that WeWork will lay off employees, confirming earlier reports by Bloomberg News.
Claure argued that WeWork has “all the necessary ingredients to make this one of the most amazing comeback stories ever, and prove our detractors wrong.”
“We have a lot of work ahead of us,” Claure said. “The work won’t be easy. The path won’t always be smooth. But we will prevail. No excuses.”
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