Redundancies at troubled startup WeWork have started sending employees home for a three-month garden leave and an extra monthly wage.
The first dismissal round on Monday had an impact on 25 percent of the workforce at Meetup, a social event app acquired by WeWork, which had approximately 50 employees, a source says.
WeWork, which has put Meetup up for sale, also fired dozens on Thursday at the Flatiron School, a coding boot camp that is also in the hands of the start-up in the shared space.
The new WeWork executive chairman, Marcelo Claure, speaks to an audience of WeWork employees about upcoming layoffs in October. The first dismissal round on Monday had an impact on 25 percent of the workforce at Meetup, an app for social events acquired by WeWork
WeWork fired dozens of people on Thursday at the Flatiron School, a coding boot camp that is also owned by the company. Employees complained that they were getting a rough deal, as the company's founder and former CEO Adam Neumann (photo) received an amount of $ 1.7 billion to leave
A dismissal offer with a garden leave of three months and a further four weeks of pay may not apply to all employees, reports Recode.
As larger cuts to 4,000 employees are expected, some of those who have already been let go have complained that they have received a rough deal, as founder and former CEO Adam Neumann received a $ 1.7 billion compensation package to leave,
& # 39; WeWork is happy to cash Adam & # 39; s equity and give him a big check, but employees like me who need that money get no value for our equity & # 39 ;, said a former Meetup employee who spoke about the condition of anonymity, Recode reports.
In the meantime, in an effort to promote morale, the new executive chairman of the company compared continuing to work with the company in the annual 26-mile marathon that he just ran on Sunday.
Meanwhile, the new executive chairman of the company, Marcelo Claure, in an effort to promote morale, compared to continuing to work with the company in the annual New York 26-mile marathon, which he personally just ran on Sunday.
& # 39; More than 26 miles, I got an incredibly modest sense of the huge size of humanity we serve every day & # 39 ;, Marcelo Claure wrote in a memo to employees. He is shown in a social media post after completing the marathon
& # 39; More than 26 miles, I got an incredibly modest sense of the huge size of humanity we serve every day & # 39 ;, Marcelo Claure wrote in a memo to employees who had leaked to the Sovereign Wealth Fund Institute.
Claure is also responsible for meeting employees to discuss the planned layoffs. He said that anyone who was asked to leave said this with & # 39; dignity & # 39; would do.
& # 39; But it is something that whoever is fired will know they are taking one for the team to ensure that this company thrives in the future, "he continued in a leaked transcript of a meeting of 23 October.
Claure, a SoftBank director, was in control at WeWork that week as part of the rescue plan for the Japanese investment firm. SoftBank, installed Claure as chairman, replacing Neumann, and committed an additional $ 9.5 billion to the approximately $ 10 billion SoftBank has already sunk into the startup.
Slightly less than a third of WeWork's global workforce will be fired and around 1,000 of the cuts will hit employees such as concierge staff, a source mentioned by the Financial Times says.
Although Neumann resigned as CEO in September following the implosion of the company's planned IPO, he remained chairman and managed the company's management through special voting rights.
As part of the SoftBank bailout, Neumann agreed to give up control in exchange for a lucrative deal with a value of $ 1.7 billion.
The deal means that Neumann has the right to sell its stake in the company for as much as $ 970 million as part of a public offer in which SoftBank will buy up to $ 3 billion worth of WeWork shares from investors and employees. He currently owns slightly more than a fifth from WeWork.
SoftBank has also agreed to grant him a $ 500 million loan to repay a credit line from JPMorgan Chase & Co, and to pay him a fee of $ 185 million for a four-year consultant assignment for WeWork, according to sources.
At a staff meeting, an angry employee showed Claure about the deal and said: & # 39; We have seen in the news that Adam gets a billion dollars, right? & # 39;
& # 39; I've been here since April 2017 and we've actually heard every quarter: & # 39; Trust me, trust me, trust me, trust me, trust me & # 39; & # 39 ;, the employee continued. & # 39; What will change? We need to see change & # 39 ;.
Claure insisted that the Nuemann package was exaggerated by the press.
The new WeWork executive chairman, Marcelo Claure, is depicted as a meeting with employees about upcoming layoffs. He said that anyone who was asked to leave said this with & # 39; dignity & # 39; would do
& # 39; As a shareholder, he can sell his shares. He founded the company, he has a huge number of shares. So nobody pays Adam a billion dollars or $ 1.7 billion & Clause said.
& # 39; Two, Adam for whatever reason, has borrowed money from JPMorgan & # 39 ;, Claure continued. & # 39; So we decided to lend Adam a certain amount to pay for his loan. But in return if he sells those shares, he has to pay us back immediately. & # 39;
& # 39; And third, we pay him consultancy fees & # 39 ;, said Claure, who stated that the compensation was in exchange for Neumann who renounced his special voting rights, and for factual advice that Nuemann could give Claure in the future.
Claure emphasized in particular that Neumann would no longer play a role in managing the company in the future.
& # 39; I intend to use it, but he will be Adam with me and I with you. So Adam will not play any role in the company, he will not be on the board, but I intend to use part of his knowledge & # 39 ;, Claure said.
The SoftBank acquisition agreement valued the company at just $ 8 billion, a huge drop from the $ 47 billion valuation in the last WeWork financing round in January.
Marcelo Claure, a former SoftBank director, took the lead at WeWork as part of the rescue of the Japanese investment company at the startup. Claure is pictured above with SoftBank CEO Masayoshi Son
As part of the deal, SoftBank offered to purchase shares of existing investors and employees for $ 19.19 per share.
This is reportedly less than the exercise price of stock options for employees issued since January 2016, meaning that options that have been issued since that time are worthless under the current valuation.
Neumann's case is different in that he owns his shares fully and can sell them at a profit even under the lower valuation.
A WeWork spokesperson declined to comment on the layoffs, Recode reports.
Termination contracts reviewed by the press require that employees do not sue WeWork and agree to non-competition clauses, which contributed to the disappointment of former employees.
& # 39; What does that mean for non-competition? So we can't work at a school, a co-living facility, a gym, a technology company? There are so many things & # 39 ;, says a former Meetup employee.
In addition to WeWork's core activity of renting office space (photo), the company has expanded to other companies, including & # 39; WeGrow & # 39 ;, a children's school that the company now wants to close. WeWork has also sunk $ 13 million in a wave pool
In addition to WeWork's core activity of renting office space, the company has expanded to other companies, including & # 39; WeGrow & # 39 ;, a children's school that the company now wants to close. WeWork has also sunk $ 13 million in a wave pool and allegedly has plans to launch an electronic games division.
The former employee claimed that human resources repeatedly told redundant workers that redundancy offers & # 39; generous & # 39; goods.
& # 39; It is a kind of insult that they describe this as generous & # 39 ;, said the former employee about the conditions for dismissal, Recode reports.
Redundant employees were warned about discussing dismissal conditions and were told they would be followed by the company and & # 39; aggressive action & # 39; could undergo because of talking.
A deadline of November 19 was set for accepting the termination benefits. Employees also have the option of leaving without compensation.
Many employees had joined WeWork when the company was valued at $ 47 billion and planned to make a first public offering that was one of the largest this year. The employees were also early investors who were planning to redeem their equity in the company.
& # 39; The thing about WeWork is the fact that the CEO was essentially a scam and walked away very rich & # 39 ;, Rebecca Givan, professor of management and labor relations, told Rutgers Univerty. & # 39; And all these employees are sewn & # 39 ;.
Rebecca Givan, professor of management and labor relations at Rutgers University was critical o WeWork founder Andrew Neumann (photo), saying: & # 39; The thing about WeWork is the fact that the CEO was essentially a scam and walked away very rich & # 39 ;
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