Is It a New Trend of CEOs Stepping Down?
A lot has been happening in and around co-working space ‘WeWork’ of late. Recently, WeWork co-founder Adam Neumann had agreed on Tuesday that he would resign as chief executive and give up on majority voting control. This was after SoftBank Group and other shareholders turned on him over a plunge in the US office-sharing startup’s estimated valuation.
This was decided after WeWork’s parent company We Company postponed its IPO, somewhat around last week, getting a push back from stock market investors. This was not only towards the company’s widening losses, but also over Neumann’s firm grip on the company.
What Does it Mean For SoftBank?
This move was indeed a major blow for SoftBank, as they desperately hoped for an IPO for WeCompany, that would bolster its fortunes, as SoftBank looks forward to wooing investors towards its second $108 billion Vision Fund.
SoftBank invested in WeCompany when it was valued at $47 billion in January. SoftBank somehow managed to muster enough opposition to Neumann in a member board meeting.
In a press statement Adam Neumann said that in the recent weeks, the scrutiny directed towards him has become a significant distraction, and in his mind he decided that, it is in the best interest of the company that he would step down as the chief executive.
Neumann would continue staying on board as the non-executive chairman. Experts say that Neumann also agreed to reduce the power of his voting shares, thus losing majority voting control. His shares now would have the same voting rights as the three WeCompany common shares and not the 10 common shares previously.
A Tight Grip
As per Forbes, the net worth of Neumann is somewhat around $2.2 billion. He developed a lot of good initiative like ‘elevating the world’s consciousness’, primarily to establish WeWork as a brand that provided for office sharing.
While a lot of investors were supportive of Neumann’s efforts, his free whiling ways and partly heavy lifestyle came to limelight, when he failed the company’s IPO underway.
Is This a Trend?
Though the stepping down of Neumann might come across as a surprise, Neumann wasn’t the first person to step down. In 2017, Uber co-founder Travis Kalanick resigned as the CEO of the ride-hailing startup. This was after he faced a rebellion from his board, mostly involving a toxic work culture and sexual harassments.