WeWork executives, including co-founder and former chief executive Adam Neumann, have been sued by minority shareholders for damages. The shared office space provider has cancelled its initial public offering, wiping more than 87 per cent in value. In a class-action lawsuit filed in San Francisco Superior Court this week, Natalie Sojka, a former WeWork employee, accused the company’s board of violating fiduciary duties to minority shareholders like her.
Soyka accused The WeWork board of asking Japan’s SoftBank Group to increase its stake in WeWork from 29 per cent to as much as 80 per cent and offering Mr Neumann nearly $1.7bn in compensation. in exchange for his retirement from the board of directors.
SoftBank and its chairman, Masayoshi Son, were among 10 defendants in the November 4 lawsuit.
“WeWork considers this lawsuit baseless,” a spokeswoman said Friday. SoftBank and outside representatives did not immediately respond to requests for comment.
The lawsuit is another challenge for WeWork. On September 30th WeWork’ parent company, WeCompany, announced it was withdrawing its IPO application as investors became increasingly wary of the company’s losses, business model and corporate governance, a week after Neumann resigned.
The true valuation of WeWork has fallen to $5.9 billion from $47 billion in August under SoftBank’s $9.5 billion rescue package.
Ms Soica said she exercised stock options after being told that WeWork intended to go public soon and that its share price would rise sharply.
However, Mr Soyka said: “The value of the company’s shares has been significantly reduced as a result of the defendant’s misconduct, shareholder stake has been compromised and there may be irreparable losses as a result of the defendant’s offer of takeover and other transactions.” ”
The lawsuit seeks to block further trading by WeWork with SoftBank and Neumann, as well as buying back shares from minority shareholders without disclosing the value of more shares in the company. It also seeks punitive damages.
SoftBank’s rescue plan includes an offer of up to $3bn to WeWork’s existing shareholders, under which Neumann sold $970m of shares, or about a third of his stake.