With a public offering pending, We had to come clean on the types of relationships (aka conflicts) that are no-no’s in publicly trade companies. Here is a summary:
CEO Adam Neumann — We purchased the trademark “We” from Neumann for $6 million
We promised to undo the transactions
Neumann owns four of the properties where We leases space
We promises to phase out Mr. Neumann’s ownership
In July 2019, Mr. Neumann borrowed more than $740 million from We using his shares as collateral (Bernie Ebbers (worldCom)pulled this kind of stunt and SOX
prohibits these loans) — about half of the loans were for the exercise of stock options
Rebekah Neumann — an executive with We and co-founder
Ms. Neumann’s brother-in-law — chief product officer
Mr. Neumann’s brother-in-law — runs We Fitness
Michael Gross vice chairman — his parents served as the real estate brokers on a building lease in Miami
Arash Gohari co-head of real estate — — owns one building leased by We
UA Contractors — doing We renovation work as well as renovations on two of the Neumann homes. The three brothers who own UA have a blended relationship with We. Employees are not sure if they are a separate firm or working for We or both. We says it is phasing out We contracts with UA.
The Barometer has seen some serious conflicts in her time, but these are the kinds of sloppy operations that have to be cleaned up before going public. This is pre-2000 corporate governance. Some caution is in order here.
For more, go to Eliot Brown, “We Work Draws Worries of Conflicts,” Wall Street Journal, September 7, 2019, p. B1.