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10/24/2019

[The Former WeWork CEO] could use the $1.7 billion golden parachute to pay upwards of four years of severance for the 4,000 people about to lose their jobs

It was recently announced that ousted WeWork founder and CEO Adam Neumann would be receiving a $1.7 billion exit package. 

The unfortunate reality of this dramatic saga is that it will also be concluded by a round of major layoffs, with estimates north of 4,000 WeWork employees slated to be laid off in the coming months.

While it's hard to pinpoint a super accurate number of average employee salary, most online sources of payroll data suggest the average WeWork staffer makes somewhere between $85,000 – $106,000 [sources: 1, 2]. Even then, both of these numbers are likely inflated by most respondents likely being tech employees, and less likely to be operational staff like janitors and front desk employees, where approximately 1,000 of the layoffs will come from, according to Reuters.

Given the astronomical payout being given to the outed CEO, we wanted to see how long he could, in theory, pay severance for the upcoming layoffs, and the number was quite shocking.

Let's say an average salary of all laid off staff will be somewhere in the ballpark of $90,000 per year (and likely lower), Neumann could use the $1.7 billion to pay upwards of four years of severance for the approximate 4,000 people about to lose their jobs.

The WeWork saga has been in the forefront of tech news, as the once hypergrowth company has hit a brick wall in recent years, with private valuations dropping from almost 50 billion dollars to below 10 billion. The company has expanded rapidly, with coworking space now prominently in major cities everywhere. The concept itself seems to have found a market fit as well, so it does beg the question where did things go so wrong for WeWork?

Adam Neumann had reportedly pitched this broad vision to investors for years, and had the growth to show for it. It's hard to argue that he didn't push coworking space into the mainstream over the past five years but it seems the growth wasn't sustainable after all.

Sean Porter is a data scientist interested in a great story. He lives with his wife and three (yes three) dogs. On the weekend you can find him in the mountains, either skiing or climbing.