Home WeWork documents reveal bosses’ golden parachutes
December 31, 2019
WeWork will have to pay close to $17m to replace its co-chief executives under exit packages negotiated in the run-up to the company’s rescue by SoftBank, according to documents reviewed by the Financial Times and people briefed on the matter.
Artie Minson and Sebastian Gunningham, who became co-chief executives after WeWork founder and chief executive Adam Neumann stepped down in September, will receive $8.3m apiece if they are sacked or leave for a number of reasons, including a diminution of their duties, cuts to their pay or involuntary relocation.
Jennifer Berrent, chief legal officer, will receive $1.5m under the same scenarios. She also will not have to repay $12m of retention bonuses if she is terminated or leaves the company, which otherwise could have been clawed back under her previous agreement.
The exit packages are set out in documents sent to shareholders of the lossmaking property company, including many of its employees, ahead of a $3bn tender offer for shares by SoftBank. They give further insight into remuneration at the top of WeWork amid a cash crunch that has forced it to scale back its global expansion and sack thousands of staff.
The FT revealed on December 24 that Mr Neumann, who left with a $1.6bn exit package, could earn hundreds of millions of dollars more under an agreement that revised the terms of some of his remaining economic interests in the company.
The packages for the co-chief executives and Ms Berrent are striking, given the WeWork board has actively considered other candidates to replace all three, according to multiple people briefed on the discussions. The three executives and WeWork declined to comment.
Mr Minson and Mr Gunningham agreed salaries of $1.5m each in September, when the company was still fighting to save its doomed initial public offering. The two men now report to Marcelo Claure, the SoftBank executive who was appointed executive chairman of WeWork several weeks after their promotion, when the Japanese company finalised its rescue deal.
Mr Minson’s pay represented a big increase in his non-stock based compensation from his time as chief financial officer, when he was “predominantly compensated” through equity awards, according to filings with US securities regulators. The former AOL executive was paid a salary of $51,000 and received $625,000 in loan forgiveness as WeWork chief financial officer in 2018.
It was unclear what Mr Gunningham earned before he was elevated to co-CEO. He was an executive at the online retailer Amazon before he joined WeWork in 2018.
Ms Berrent, who was central in drafting the documents for WeWork’s IPO and its communications with US regulators at the Securities and Exchange Commission, is receiving a salary of $600,000, according to the tender offer documents and people briefed on her pay. That compares with $871,154 last year.
Mr Minson and Ms Berrent have accumulated lucrative stakes in WeWork since joining in 2015 and 2014, respectively, which they can tender as SoftBank buys $3bn of stock from employees and investors over the coming months.
Mr Minson could receive up to $14m based on his vested shares, if the tender goes as expected, according to WeWork and SoftBank estimates, while Ms Berrent could realise up to $4.9m. Mr Gunningham did not have any vested interests in WeWork and his stock options have exercise prices above the $19.19 a share price that SoftBank is paying.
The documents sent to shareholders warned that WeWork “may continue to experience [a] significant amount of turnover of senior management”, while also laying bare the dire financial situation that WeWork faced after it in September — a fundraising executives expected would unlock more than $9bn to cover losses.
The company said it had expected to run out of cash in early November after the IPO was derailed, had it not secured fresh funding from SoftBank.