Updated form 2:32 pm ET

Office-sharing giant WeWork's parent company said Tuesday that embattled CEO Adam Neumann has stepped down as CEO as the firm tries to salvage its flailing initial public offering.

"As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade," Neumann said in a statement announcing the move.

"While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive."

The Tel Aviv-born Neumann, 40, will stay on as parent We Co.'s non-executive chairman. We Chief Financial Officer Artie Minson, formerly of AOL and Time Warner Cable, and Sebastian Gunningham, a former executive at Amazon  (AMZN) - Get Report , were named co-CEOs.

Neumann co-founded WeWork with Miguel McKelvey, who is the company's chief culture officer. Neumann said WeWork now operates in 111 cities in 29 countries.

Gunningham and Minson said in a joint statement that WeWork's "core business is strong, and we will be taking clear actions to balance WeWork's high growth, profitability and unique member experience."

And they said the company will be "evaluating the optimal timing for an IPO." 

Bloomberg reports that We must go public by year-end to ensure that it obtains a $6 billion debt financing. That financing in turn is conditioned on We completing a stock offering.

We's IPO plans stalled after investors balked at a number of issues surrounding the company and Neumann. Many have criticized his behavior, possible conflicts of interest and control of the company.

As part of Tuesday's moves, Neumann will reportedly cede majority control of We and his voting shares will be reduced to 3-to-1 votes vs. common shares compared to a previous 10-to-1 ratio.

Meanwhile, online-news site The Information reported that We is discussing cost cuts, including the prospect of cutting a third of the workforce, or as many as 5,000 people.

As for the new heads, Minson, 48, joined WeWork in 2015. His previous positions include CFO at Time Warner Cable, and chief operating officer of AOL, where he oversaw the company's spinoff from Time Warner Inc.

Gunningham, 57, joined We Co. in 2018 as vice chairman. He previously was a senior vice president and member of executive leadership at Amazon, a vice president at Apple  (AAPL) - Get Report and a senior vice president at Oracle (ORCL) - Get Report .

The latest news is a big come down for the prominent and sharply controversial executive.

Neumann persuaded investors to put big bucks -- including several billion dollars from the Japanese investing giant SoftBank (SFTBY)  -- into the company, and We's IPO had been highly touted and hugely valued at as much as $47 billion.

But investors have questioned Neumann's idea that WeWork should be valued not like a real estate company but rather like a tech startup.

And as WeWork has been posting deep losses, estimates of the company's potential valuation have dropped sharply and investor interest in the IPO has flagged.

A conflict of interest that raised investors' concern was Neumann's leasing of his own properties to We. 

And an entity he controls bought the rights to the name "We" and sold them to the company for $6 million. Complaints about the deal prompted him to reverse the transaction.

The Wall Street Journal recently reported that last summer Neumann smoked marijuana as he and friends flew to Israel on a private jet. People familiar with the matter told the paper that the flight crew found more of the drug in the plane for the return flight, and the plane's owner recalled the jet.

The Journal also has reported that Neumann has borrowed hundreds of millions of dollars against his shares in the company and sold hundreds of millions of dollars worth of his shares.