After news that WeWork would be delaying its IPO made headlines, another shocking twist to the saga was revealed: the company’s board members want Adam Neumann to step down as CEO.
According to the company’s S-1 filing, it seems nearly impossible for the board group to be able to force Neumann to do anything as he has exercise voting control. Despite this, Jeffrey Sonnenfeld, the Lester Crown Professor of Leadership Practice at the Yale School of Management, said that contracts have limits and can be “abused and taken away for improper conduct.”
So how could the board actually convince Neumann to step down from his role?
First, the board could simply persuade him that this is in the best interest of the company.
“The [faction] may be questioning Adam’s ability to run a public company at scale,” said Alan Wink, director in the capital markets practice of advisory and accounting firm EisnerAmper. “[They have to] convince Adam that for the company to take off and have a successful IPO, maybe they need different leadership.”
The board group could also use legal maneuvering to prove that Neumann’s actions have harmed the company and resulted in breach of fiduciary responsibility. The board would certainly have a case as Neumann has seemingly participated in several potential conflicts of interest.
Lastly, the board could demand Neumann repay his cashout of around $700 million he received through sales and loans ahead of the IPO. This could be particularly useful in light of Neumann repaying the $5.9 million he received for selling the trademark “We” back to the company.
