WeWork Cos. CEO Adam Neumann is making millions in landlord payments from his own company, news reports said Wednesday.
The Wall Street Journal said that Neumann, 39, who founded the company in 2010, personally buys buildings that are leased to the company's co-working arm, WeWork, prompting conflict of interest concerns among some of the company's investors. The real estate publication, The Real Deal, wrote about the situation last March.
In a statement, WeWork said the privately held company "has a review process in place for related party transactions. Those transactions are reviewed and approved by the board, and they are disclosed to investors."
The Journal article cited a case in which International Business Machines Corp. (IBM) - Get Report moved into a Manhattan building managed by WeWork. Neumann leased the property to WeWork after buying it, the Journal said, citing to people familiar with the situation.
WeWork, which was recently valued at $47 billion by investor SoftBank Group Corp. (SFTBY) , signs long-term leases for office space with landlords, then subleases the space on a short-term basis to companies. Neumann is WeWork's largest individual shareholder and has voting control over the company.
The Journal said that multiple investors held concerns for a conflict of interest about the arrangement, due to the potential that the company's CEO could act in self-interest, rather than that of the company.
Last week, SoftBank Group reportedly cut back on its plans to invest in WeWork, opting against taking a controlling stake in the operator of co-shared office spaces. SoftBank will put an additional $2 billion into WeWork, on top of the $8 billion it already invested, Bloomberg reported, citing people familiar with the situation.
In October, reports surfaced that SoftBank was considering investing between $15 billion and $20 billion in WeWork. SoftBank is one of the largest tech investors in the world, controlling both its own capital and the Vision Fund, which includes large amounts of Saudi Arabian capital.
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