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(Bloomberg) -- WeWork’s board is convening Monday and could discuss ousting Adam Neumann as chief executive officer, people familiar with the situation said, as the startup seeks to salvage its troubled initial public offering.
With the drama of a palace coup, Neumann has found himself at odds with WeWork’s largest investor, SoftBank Group Corp. Masayoshi Son, founder of the Japanese conglomerate, is among those pushing for Neumann to resign, a person familiar with the situation said, after widespread criticisms of the company’s governance and spending. Some directors are expected to raise the prospect of Neumann becoming non-executive chairman, according to the people familiar with the situation, who asked not to be identified because the discussions are private. The choice is ultimately Neumann’s, as the 40-year-old CEO maintains effective control of management decisions.
The boardroom infighting not only imperils the IPO but also a $6 billion loan contingent on the deal. The unprofitable company must complete a successful stock offering before the end of the year to keep access to the credit facility. WeWork’s debut high-yield bond dropped three cents on the dollar after news that some directors are planning to push Neumann out.
WeWork conceded last week that its plans for going public would have to wait after talks with potential investors lowered expectations for the company’s planned IPO valuation to $15 billion or less, after a previous valuation of $47 billion. Among the concerns they voiced: Neumann’s controversial style and control of the company.
Rarely has so much gone so wrong so fast for a young company in the spotlight.
“It’s Uber-scale mess,” said Kellie McElhaney, a professor at the University of California Berkeley’s Haas School of Business, who blames both the board and Neumann for not learning from that company’s earlier mistakes. “He’s really taken a first-mover advantage that WeWork had in the space and blown it in a big way.”
Read more: WeWork, WeWait, WeWorry: What’s Next for CEO Adam Neumann?
The WeWork story is beginning to fit squarely into the era of unicorn capitalism: A young and charismatic entrepreneur disrupts an industry, runs afoul of elders and investors, sometimes winning but sometimes failing to live up to their own hype.
Institutions including Benchmark Capital, one of WeWork’s investors, pushed out Uber Technologies’ Travis Kalanick before the ride-hailing company went public.
Still, even if some directors want to oust Neumann, it won’t be easy given the company’s governance structure. Based on the number of shares he controls and their unique super-voting rights, Neumann has the power to get rid of the entire board on his own, according to the prospectus.