"You've Got To Be Kidding Me": Outraged WeWork Employees Furious At Neumann's $1.2BN "Platinum Parachute"
by Tyler Durden on October 23, 2019 at 4:05 pm
"You've Got To Be Kidding Me": Outraged WeWork Employees Furious At Neumann's $1.2BN "Platinum Parachute" In the aftermath of the stunning news that after extracting $700 million from WeWork, which was effectively insolvent before SoftBank doubled down on its money-losing investment to breathe some life in the imploding office subletter, the company's ex-CEO Adam Neumann was set to reap another $1.2 billion payday, outspoken critic Scott Galloway said that "This is a disaster we'll be teaching for decades in b-school" adding that while the CEO gets a platinum parachute, "thousands of employees are scrambling to clean up the mess, knowing they have a 1 in 2 chance of being fired." This is a disaster we'll be teaching for decades in b-school. The idolatry of innovators leads to billion-dollar payouts while thousands of employees are scrambling to clean up the mess, knowing they have a 1 in 2 chance of being fired. https://t.co/NUdBQrZbUF — Scott Galloway (@profgalloway) October 22, 2019 Yet while Galloway may be correct in his business school case study forecast, he may have underestimated the anger bubbling among the company's employees, because as Bloomberg notes, the reaction from his ex-colleagues, who are facing the prospect of mass job cuts and a corporate crisis: "You’ve got to be kidding me." As WeWork's disheartened employees walked in on Tuesday to learn that their recently departed messiah CEO was set to wave farewell to his noble pursuit of "elevating the world's consciousness" and quit as WeWork's Chairman in exchange for over $1 billion even as most of them faced near-certain termination, they took to the company's system-wide communication system and that was one of the comments posted, reflecting the mood of anger and betrayal throughout its headquarters in New York. And, as Bloomberg adds, "dozens of employees expressed indignation in interviews and messages to colleagues on company Slack channels." Predictably, those speaking out against an epic injustice that will be used by politicians for years to show the wealth chasm that has developed between the rich and everyone else, requested anonymity in a bid to protect their jobs, especially with management weighing the dismissal of thousands of employees. To his credit, Neumann did build WeWork into a global real estate company fueled by relentless optimism and billions of dollars in investment capital and debt. In retrospect, however, virtually anyone could have done with Neumann did: after all, he was essentially selling a dollar for less than 50 cents, with the company set to burn through almost as much cash this year as it makes in revenue. As such, it was only the generous investments by SoftBank, Benchmark and other VC who fell for Neumann's spell that made WeWork "success" possible in the first place. In the end, however, the company sports a mere $8 billion valuation after investors already put down more than $17 billion into the venture: so far they are losing more than 50 cents for every dollar invested. Which means that the only winner here is Adam Neumann who somehow will walk away with nearly $2 billion. Ironically, it was his fake, virtue signaling sermons about community and mission that engendered a fierce loyalty among his gullible staff and investors for years. But it took just a few weeks for his aura to vanish over once public investors were given a closer look at the business ahead of an initial public offering: as a result of the wholesale revolt at what Neumann was peddling, WeWork's valuation imploded from $47 billion to $8 billion as it abandoned its IPO. More importantly, absent a last minute bailout from SoftBank - which had already sunk $9 billion into WeWork - it would have been bankrupt in November. Meanwhile, the company's thousands of employees were forgotten by everyone, including their former messiah who it turned out, cared only about his exit package than his co-workers, whose consciousness would no longer be elevated. To be sure, in recent weeks, an executive exodus and cost-saving measures had already dampened morale. Especially in satellite offices, many workers had stopped coming into work. But it was the news of Neumann’s “platinum parachute,” as one former employee described it, made things a lot worse this week. A link to a news article about the deal on WeWork’s Slack network Tuesday drew more than 100 “thumbs down” emoji from employees. Several workers noted the irony that WeWork could not afford payroll costs associated with the planned job cuts but that its largest shareholder agreed to pay a hefty fee to Neumann. One post read: “So we’re too broke to pay employees severance, but Adam gets $200m?” Another employee posted a photo of the orphan from “Oliver Twist” with the caption: "Please, Masayoshi Son, can I have some severance?" To that employee we have some soothing words: when this insane liquidity bubble finally bursts, Masayoshi Son will be in urgent need of severance himself. As Bloomberg concludes, whereas Neumann was the main subject of staff fury, some complaints were also pointed at the pair of men who replaced him as CEO last month: “Seriously, where’s the email from our co-CEOs or whoever’s running the company now?” Tyler Durden Wed, 10/23/2019 - 12:05 Tags Business Finance
Trouble Brews for Companies That Gorged on Cheap Credit
on October 23, 2019 at 3:56 pm
Cutting off a lifeline for troubled borrowers would lead to more bankruptcies.
Stocks Near Record Highs Send False Signal
on October 23, 2019 at 3:53 pm
From U.S. Treasury securities to gold and the shares of utility and healthcare companies, it’s been a great time for financial assets that provide a hedge against an economic slowdown.
S&P Warns of Increased Contagion Risk at Indian Financial Firms
on October 23, 2019 at 3:52 pm
The risks of contagion are rising in the Indian financial sector and any failure of a large shadow lender could lead to a “solvency shock” to banks, S&P Global Ratings said Wednesday.
Lira Surges As Trump Lifts Turkey Sanctions: "Now, We're Getting Out... Of This Bloodstained Sand"
by Tyler Durden on October 23, 2019 at 3:51 pm
Lira Surges As Trump Lifts Turkey Sanctions: "Now, We're Getting Out... Of This Bloodstained Sand" Update (1145ET): President Donald Trump declared a "big success" in Syria, saying that he is lifting recently imposed sanctions against Turkey after the country complied with a cease-fire agreement with Kurdish forces in Syria. “The sanctions will be lifted unless something happens that we’re not happy with,” Trump said Wednesday morning in a statement from the White House. Trump said the penalties would be reimposed if Turkey resumes attacks on the Kurds. Big success on the Turkey/Syria Border. Safe Zone created! Ceasefire has held and combat missions have ended. Kurds are safe and have worked very nicely with us. Captured ISIS prisoners secured. I will be making a statement at 11:00 A.M. from the White House. Thank you! — Donald J. Trump (@realDonaldTrump) October 23, 2019 The president also called a temporary ceasefire that had been announced last week "permanent," adding that: "now we're getting out...let someone else fight over this long bloodstained sand." The Lira is spiking on the news... * * * As we detailed earlier, EU governments have been fiercely divided over how to react to Turkey's military incursion into northern Syria which commenced on Oct. 9 amid a US draw down from the region. One senior European diplomat described the situation to Reuters as “complete chaos”. However, a draft resolution has been prepared this week, seen by Reuters, reportedly with the backing of all political groups in EU parliament, which urges “appropriate and targeted economic measures against Turkey” — and is expected to be adopted Thursday. Turkey-backed fighters in northeast Syria. Getty Image. The targeted measures includes the following per Reuters: freezing of preferential treatment for Turkish agriculture exports to the EU. urges the suspension of the EU customs union with Ankara, a measure that would hit the 200-billion-euro ($222.3 billion) annual trade between the 28 EU nations and Turkey. and opens the possibility to reduce the nearly 250-million-euro yearly financing given to Ankara as part of its protracted process to become an EU member, an option backed by the center-right group. One German center-right lawmaker Michael Gahler, who represents the largest political bloc in the EU assembly, said, “We demand that Turkey immediately withdraw from Syria.” This latest push to slash economic preferential treatment for Turkey comes after a failed push led by Germany and France to impose an EU-wide arms embargo on Ankara, who were concerned Turkey would use European weaponry to conduct massacres and human rights violations against the Kurds. It also comes after President Erdogan has repeatedly threatened to flood European countries with millions of Syrian refugees if he couldn't gain international backing for his 'safe zone' plan. While the EU has called for a UN-administered zone in northern Syria, its parliament could additionally block any new EU funding for Turkey's resettlement of refugees, estimated at 3 million people. Tyler Durden Wed, 10/23/2019 - 11:51 Tags Politics