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Some WeWork board members seek to remove Adam Neumann as CEO



A block of WeWork executives is planning to press

Adam Neumann

to resign as CEO after a violent week in which his eccentric behavior and drug use emerged and the startup delayed the long-awaited IPO.

A group of officials associated with

SoftBank Group
Corp.


9984 0.17%

the company's largest investor, Neumann wants to relinquish the title of CEO of We Co., parents of the office-sharing company, people familiar with the matter is said.

The board is expected to meet as soon as this week and potentially consider a proposal for Mr. Neumann to become We & # 39; s non-executive chairman, some of the people said. It would allow him to stay in the company he built into one of the country's most valuable startups, but push in new leadership to invest in a stock exchange listing that would provide We with the cash it needs to sustain the rapid growth.

more than $ 2 billion in 201

8 and analysts have estimated that on the current path we will run through what it has at hand sometime next year.

Every coup attempt is a gamble: Mr. Neumann still has allies among the directors and the ability to fire the entire board thanks to shares he controls that provide additional votes. But SoftBank, which has invested more than $ 9 billion in the company and is represented on the board, also has significant influence, and we need the Japanese conglomerate to continue to pump in cash.

It could not be learned how all of We Directors – there are seven including Mr. Neumann – are in line, and the situation is fluid.

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SoftBank's patience has been tested. Earlier this year, it bought shares of We worth $ 47 billion, a level that now looks wildly exaggerated. When we prepared to list the shares earlier this month, the company's expected valuation had fallen to about a third of that.

Even with that rebate, we were forced to shrink the offer as a criticism of the company's governance and financial losses – $ 1.6 billion last year, and grew – despite the rapid revenue growth.

The Wall Street Journal reported last week that Mr. Neumann had taken marijuana on a flight from New York to Israel and asked the jet owner to remind him of the plane. The disclosure contributed to concerns about Mr. Neumann's management style and transactions with the company that made him rich.

We had already made management changes intended to win reluctant investors. On September 13, it reduced the strength of Mr. Neumann's oversight shares – leaving him still in control, as well as reducing his wife's role in corporate affairs and reversing his controversial sales to the company of a "We." [19659005] Some of SoftBank's executives have long been wary of We's soaring valuation and Mr. Neumann's unusual behavior, even as they continued to give him money. SoftBank is expected to buy as much as $ 1 billion in stock in We & # 39; s initial public offering, much of the roughly $ 3 billion it sought to raise from investors, people said. This commitment was not enough to keep the listing on track, although we have promised to get it this year.

SoftBank CEO

Masayoshi's son

has long been a vocal advocate for We and Mr. Neumann, who, like him, is viewed by many as a visionary. Son told CNBC in March that he still wanted to invest more in the company despite the concerns of some of his own investors. SoftBank has invested in We directly and through Vision Fund, a $ 100 billion pool it raised in 2017.

Vision Fund's $ 4.4 billion investment in 2017 we valued at around $ 20 billion. When the fund's largest investors, a couple of Middle Eastern governments, last year appreciated investing more, SoftBank itself stepped in and pledged $ 4 billion to a valuation of $ 47 billion.

Mr. Neumann would not be the first founder of the startup forced out of controversy.

Uber Technologies
Inc.

's

Travis Kalanick

was pushed out of his board in 2017 after the company was widely criticized for a chauvinistic and toxic work culture. Uber went public this spring with a new CEO brought in from outside.

Write to Maureen Farrell at maureen.farrell@wsj.com, Liz Hoffman at liz.hoffman@wsj.com, Eliot Brown at eliot.brown@wsj.com and David Benoit at david.benoit @wsj. com

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