Referring to a CEO by his first name is a red flag, too.
Can anyone explain a possible motivation for doing this? It seems like it's a completely circular transaction, or is my fraudster-fu just not strong enough to see the upside?
Shortly after the option awards were issued, Adam exercised the time-based option described above in exchange for a $362.1 million full recourse promissory note payable to the Company (with an interest rate of 2.89% and a maturity date of April 11, 2029). In August 2019, Adam repaid the promissory note (including interest) in full by surrendering to the Company all of the shares received in respect of the time-based option described above. Following the settlement of this loan, the Company issued to Adam the number of profits interests equal to the number of shares surrendered by Adam in settlement of the loan.
The reality of this behavior is that free capital/cash should be looked at as fuel for growth. To judge the financial merit of this you have to wonder why WeWork could not have made more than 2.98% on that capital.
I could be missing something, any finance folks please correct me if I’m viewing this wrong or incomplete.
This is pretty much the same like when a company offers an employee share purchasing program where you can buy say $20,000 worth of restricted stock within the allotted time window which is usually a few weeks but your company then spreads the payment over 6-12 months by deducting your pay each month.
Companies also offer a similar service when you have options vesting they offer to pay the tax for you that month and spread it out over several months so you won't have to immediately convert some of the shares you get to pay for exercising the option.
Just for reference my US employer in the UK offers this, several other companies in the UK i worked for also offered similar services.
Companies here offer loans all the time including for things like seasonal train tickets (some forfeit the loan and you have to pay just the tax value on it after a year of employment for train passes) and other large expenses which are work related.
It's a very interesting network of financial engineering that really is quite intricate since I imagine commercial real estate is a very supply-constrained market, which is why they can charge such high rent with seemingly not much value provided.
With the turmoil of Uber/Lyft, Tesla and now We, I’m just looking for more popcorn...
It might be useful to have a "name and shame" list of funds which intend to buy into the IPO so investors can easily tell where they need to divest.
I don't want to watch the world burn, but a few IPOs in flames might be better for us in the long run. Pass the popcorn.
That means forgoing most of the broad based index funds. I don't love that idea either.