Three WeWork board members who presided over the company’s downfall last year have resigned in the past month, and a fourth is planning to leave.
The exodus of the company’s top advisers signals a changing of the guard at the troubled office-space company, which has been transforming itself from a money-hemorrhaging startup to a traditional real estate operation following a brush with bankruptcy last year.
Longtime SoftBank executive Ron Fisher, Rhone Capital CEO Steven Langman, and former Goldman Sachs executive Mark Schwartz have all left in the past month, according to a person familiar with the situation. The board members could not be immediately reached for comment, and WeWork did not respond to a request to make them available.
The departures come as the company has installed new advisers and executives to its board in the hope of guiding it to profitability. A person familiar with the situation said the departures were negotiated as part of $9.5 billion rescue package SoftBank’s committed to in October.
Lew Frankfort, former CEO of handbag maker Coach, plans to resign from the board when a proposed tender offer from SoftBank closes in April, the person said.
Of 10 board seats, five are allocated for SoftBank appointments and five are designated for independent advisers. Once Frankfort departs, there will be four empty seats.
WeWork’s newly appointed CEO Sandeep Mathrani and SoftBank executive Kirthiga Reddy will take two of the SoftBank seats. This is in addition to board seats taken by chairman Marcelo Claure, a SoftBank executive, and Jeff Sine, a partner of the Raine Group, who both joined as board members in October.
Only two long-standing board members remain: investors Bruce Dunlevie, the CEO of Benchmark Capital, and John Zhao, CEO of Hony Capital.
WeWork announced on Thursday the appointment of Reddy, a partner at SoftBank Investment Advisers where she has overseen investments in multiple companies,Collective Health. Before joining SoftBank, she worked at Facebook for seven years, where she started as its first-ever India employee, and ultimately became its managing director of India and South Asia.
Reddy will also be the first woman on the company’s board. WeWork announced last fall that Frances Frei, a Harvard Business School professor, was expected to join the board when its planned public offering was completed. But the IPO was withdrawn and Frei never joined.
“Kirthiga has more than two decades of experience in technology-driven transformations, both as a proven executive leader and an investor,” Claure said in a statement. “We will continue to identify and recruit additional directors who bring complementary and strategic benefits to the business.”
Reddy, a partner at SoftBank Investment Advisers, will replace Fisher, who is leaving the board this week, according to a person familiar with the situation. Fisher, a vice chairman at SoftBank, is in talks to leave the tech conglomerate after more than 20 years, according to the Financial Times. He oversaw its investments in WeWork.
Her appointment follows that of Mathrani, WeWork’s new CEO, who has a lengthy background as a real estate executive. He recently left Brookfield as CEO of its retail business, a post that followed eight years at General Growth Partners, a company he led out of bankruptcy.
After WeWork’s well-documented upheaval last year — including a failed attempt to go public, the ouster of its larger-than-life CEO Adam Neumann, and a nearly $40 billion decline in valuation — attention soon turned to the company’s board.
In particular, investors and media reports scrutinized corporate governance issues and purported self-dealing at the company. Part of the issue was the outsized voting power held by Neumann, whose stock gave him the majority vote on board decisions.
Among the transactions that raised eyebrows was WeWork’s agreement to lease property owned by Neumann. Others included the company paying Neumann $5.9 million for the rights to the word “We” and the purchase of a $60 million company jet. These transactions, many of which came to light in paperwork the company filed to the U.S. Securities and Exchange Commission ahead of its planned public offering, were ultimately unwound.
WeWork was also said to have overpaid for the Lord & Taylor building in Manhattan.
Still, when Neumann left, some board members commended him for building the company.
“Adam is that very rare breed of entrepreneur who has the vision and drive to conceptualize an enormous business opportunity and then attack it relentlessly,” Frankfort said in a statement at the time. “He has created one of the fastest-growing businesses in history, and my fellow directors and I thank him for his leadership.”
WeWork’s new braintrust has since taken steps to chart a less tumultuous path as a real estate company, and has offloaded non-core businesses to focus on providing office space.
“We will continue to identify and recruit additional directors who bring complementary and strategic benefits to the business,” Claure said in a statement Thursday.