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- WeWork, in its bid documents, disclosed a series of related party transactions involving CEO Adam Neumann, his wife and various family members.
- However, according to an article in the Wall Street Journal, the company did not disclose a set of transactions involving family members of other company officials.
- The transactions mentioned by the Journal concerned members of the family of Michael Gross, vice president of WeWork; Arash Gohari, his co-head of real estate; and Granit Gjonbalaj, its director of real estate development.
- WeWork faces investor opposition during its planned IPO due in part to concerns about such transactions and its broader corporate governance.
- Read all the Business Insider WeWork coverage here.
WeWork's recently filed public tender documents have raised eyebrows with its list of numerous transactions in which the company is involved and which involve family members of CEO Adam Neumann and his wife, Rebekah.
Although these related party transactions appeared to be done by many corporate governance experts, they were not exhaustive. The document omitted a set of operations involving family members of other employees, including the parents of Vice President Michael Gross, according to a new report published in the Wall Street Journal.
WeWork spokeswoman Erin Clark declined to comment on the report.
Read it: Here's how WeWork answered the 5 most important questions about its business – and why analysts are still worried about its IPO
The Review's report details some cases of related party transactions, some of which had already been reported.
WeWork hired Gross's parents to serve as real estate brokers under a lease agreement that they were negotiating in Miami, the newspaper reported, citing familiar anonymous sources of the contract. The company also rented premises in Miami in a building owned in part by the brother of Arash Gohari, his co-head of real estate, according to the report.
In addition, the commercial real estate company has been involved in a series of transactions with the brothers of Granit Gjonbalaj, its director of real estate development, according to the Journal. WeWork hired Gjonbalaj from UA Builders, a New York outsourcing company that oversaw the construction of some of WeWork's first office spaces. Even after hiring Gjonbalaj, WeWork continued to work intensively with UA Builders, which was then run by his brothers, Albert and Jimmy, according to the report.
WeWork has a network of related party transactions
Gjonbalaj told the WeWork people that he had divested his stake in UA Builders and had recused himself from any dealings with the company, the newspaper reported. But people who have interacted with UA Builders have consistently reported, a situation that has made many people "uncomfortable," according to the report.
WeWork hired Albert and Jimmy Gjonbalaj last year to set up its own internal procurement business, according to the newspaper. After hiring, WeWork continued to do business with other companies he owned, including a plumbing company, according to the report. WeWork terminated these contracts last year and Albert and Jimmy Gjonbalaj left the co-working start-up earlier this year, the Journal reported. Their brother, Granit Gjonbalaj, remains at WeWork.
It is not clear whether WeWork had the obligation to report the transactions in documents relating to its IPO. Standard accounting rules require companies to disclose related party transactions involving not only the principal owners of a company, but also its officers and their family members. However, companies may be able to exclude such transactions from their reports if they are not significant for their business.
In his document, WeWork did disclose a series of transactions involving Neumann and his family members. The company has leased space in buildings that Neumann partly owns. She bought the trademark "We" from him for $ 5.9 million. And that lent him hundreds of millions of dollars.
Earlier this week, WeWork said Neumann had donated to the company the $ 5.9 million it had received for the brand.
The report of the Review comes as WeWork faces a sharp reduction in its IPO project of potential investors. Other reports this week indicate that he plans to debut in public markets with a market capitalization of just $ 20 million, less than half of his last private valuation.
Do you have any advice regarding WeWork or another company? Contact this reporter by e-mail at [email protected], send him a message on Twitter @troywolv, or send him a secure message via Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.
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