Adam Neumann, WeWork's controversial co-founder and CEO, is stepping down effective immediately.

The decision was reached on a "lengthy board call" Tuesday, The New York Times  reported. Neumann reportedly had raised red flags for investors because of his conflicts of interest in the business and his mercurial leadership style. He will remain as nonexecutive chairman of WeWork's parent company, The We Company, according to a company statement. Artie Minson, formerly chief financial officer, and Sebastian Gunningham, who joined the company last year from Amazon, have been named co-CEOs.  

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

The We Company has been besieged by critics since the business first revealed details of its corporate governance in documents last month related to its initial public offering. Disclosures showed Neumann had inexplicably sold his own company the trademark for "We" for nearly $6 million. He has since returned the money. Neumann also owns four buildings he leases back to WeWork, and initially, the company's IPO prospectus included a clause that would let Neumann's wife, Rebekah, pick his successor under certain circumstances. He has also cashed out about $700 million in stock sales and loans.

The disclosures, coupled with We's confusing corporate structure, did not sit well with public investors. The company, which had at one point reached a $47 billion valuation after a funding round in January, had reportedly considered going public at a valuation as low as $10 billion, according to Reuters in mid-September. The company issued a statement September 16 announcing it was delaying the IPO and saying only that it hoped to complete the offering by the end of the year. 

Published on: Sep 24, 2019