markettechpro
Sep 11, 20191 min
We often teach that the core principle of corporate governance is that the Managers of a company manage it for the collective good of the shareholders; not for the benefit of some to the disadvantage of others.
So, during the run up to the IPO of “We”, previously known as “WeWork”, the Founder charging $ 5.9 million for the ‘transfer’ of the brand from himself to the company, raised more than just an eyebrow.
That, and the IPO filing opened a can of worms about the different ways in which CEO Adam Neumann profits from We which you can read about here. ( ‘We’ leases some properties – from him!)
"Common good" sounds obvious when taught in class. But it is the foundation principle in selecting a stock for investment. A business may be profitable, but those profits do not flow fully to investors if the Corporate Governance is shaky or flawed. And ‘We’ may have revealed a fatal flaw in its genetic code which will cost it valuation at the IPO.