WeWork took a key step toward its much-hyped initial public offering last month, revealing to regulators the makeup of its board. But the fast-growing New York start-up, which leases shared office space, immediately came under fire from critics who noted that the board roster failed to include a single woman.
Now, the company says it will add a woman — Harvard Business School professor Frances Frei — to its board, according to a filing made public Wednesday. Within a year of its IPO, the company aims to add another director to its seven-member board, “with a commitment to increasing the board’s gender and ethnic diversity,” according to the amended filing.
Women remain a minority in the tech industry, and diversifying company leadership is considered a vital step toward rectifying issues such as discrimination and harassment. Board seats often go to a company’s investors, said Ariella Steinhorn, co-founder of Simone, an organization that advocates for workplace equity. And those investors, she says, are often white men.
“Nowadays, it should be a no-brainer to diversify your board from the start, especially if you’re a company that purports to provide a ‘community,’ ‘culture,’ and ‘consciousness elevation’ platform for thousands of companies worldwide,” Steinhorn said in an email, repeating language WeWork used to describe its mission in an IPO filing last month.
WeWork spokesman Adrian Zamora declined to comment.
Several of WeWork’s board members — including Bruce Dunlevie, a founding partner of venture capital firm Benchmark Capital; Ron Fisher, founder of SoftBank Capital; and John Zhao, founder of Hony Capital — were designated by venture capital firms that have funded the company. The other three directors are Lew Frankfort, the former Coach chief executive; Steven Langman, co-founder of the global private equity firm Rhone; and Mark Schwartz, a former Goldman Sachs executive.
Frei was previously a senior vice president at Uber, where she was charged with cleaning up a toxic corporate culture. She did not immediately respond to a request for comment.
The company’s all-male board is not an anomaly among newer companies. About 40% of companies that went public over the last few years did so without a single woman on their boards, according to a 2018 study by Equilar, a compensation research firm. The same study found that the boards of companies that held initial public offerings since 2015 on average had disproportionately fewer women than established public companies — 11% compared with 20% at more mature public companies.
Some prominent tech companies have gone public this year with at least one female board member, though they too have faced criticism for problems with gender diversity.
When a female engineer publicly alleged Uber ignored her complaints about sexual harassment, it triggered a backlash against the company. The ride-hailing firm added a second female board member in 2017. Three members of rival Lyft’s nine-member board are women.
Board makeup is but one of the problems facing WeWork as it prepares for its IPO. The company cited huge losses in its prospectus — a net loss of more than $1.6 billion last year on $1.8 billion in revenue. Still, it is expected to raise about $3.5 billion in what would be 2019’s second-largest initial public offering (behind Uber). The company could begin a roadshow for investors as early as next week, people familiar with the matter told Bloomberg.
WeWork also disclosed Wednesday that CEO Adam Neumann returned $5.9 million worth of partnership interests initially granted to him as compensation for trademarks used in the company’s rebranding.
WeWork’s management team includes several women in prominent roles, including Rebekah Neumann, Adam Neumann’s wife and company co-founder, who acts as chief brand and impact officer. Jennifer Berrent serves as co-president and chief legal officer.
Several tech giants probably will have to add women to their boards of directors by mid-2021, per California’s SB 826, signed into law last fall by then-Gov. Jerry Brown. The law requires that all publicly traded companies based in California have at least one woman on their board by the end of 2019 — and at least two women by the end of 2021. Boards with six or more members must include three women. (WeWork is not subject to this law, as it’s based in New York.)
Frei, who will be joining WeWork’s board once the offering is completed, previously was senior vice president at Uber, where she served on the management committee that ran the company as it searched for a new chief executive. According to WeWork’s Wednesday filing, Frei has provided human resources consulting services to the company since March 2019.
“It seems Frances Frei has been the go-to woman for companies like Uber and WeWork looking to improve their image. It’s certainly a start,” Steinhorn said via email.
Steinhorn noted that Frei has expertise in organizational psychology and management, and also advises progressive ventures such as Vault Platform, a start-up making it easier for companies to report harassment and bullying to human resources.
But a single addition to the board isn’t enough to shift a company’s culture, Steinhorn said.
“It’s increasingly critical that companies add diverse perspectives to their board, not just one woman here or one minority there,” Steinhorn wrote. “It’s sad that WeWork made this decision only in hindsight, as a reaction to the news cycle following their IPO.”