WeWork co-founder and CEO Adam Neumann, speaking earlier this year in L.A. Photo by Michael Kovac/Getty Images for WeWork.

WeWork co-founder and CEO Adam Neumann is under scrutiny based on a Wall Street Journal report that he's "cashed out more than $700 million from the company ahead of its IPO through a mix of stock sales and debt."

Behind the scenes: A source tells Axios that around $300 million was in the form of stock sales, most recently via an October 2017 tender offer from WeWork investor SoftBank. The remainder was loans.

Why it matters: Startup founders used to be discouraged from taking any equity out of their still-private companies, under a theory that it misaligned interests. That has changed over the past decade, with some investors arguing that founders can be more focused if they needn't worry about things like mortgages and car payments.

Neumann's haul is much larger than what is needed to satisfy such responsibilities, but he's said to remain the company's largest single shareholder, and the loans were taken out against the value of WeWork stock. In other words, he retains very significant incentives to build the business and make it profitable.

A source close to WeWork says that Neumann does not plan to sell shares in the company's IPO.

  • Neumann used some of the $400 million in loans to exercise stock options in WeWork, per the source.
  • Some of the proceeds, as the WSJ reported, were used to buy interests in commercial buildings that later leased space to WeWork. This arrangement is seen by some critics as self-dealing, and by some supporters as doubling down on WeWork (which, particularly in its early days, was not viewed by all landlords as a stable tenant).
  • Neumann also is said to have made around $100 million in charitable donations, per the WSJ, although no recipients were identified.

WeWork has launched employee stock tender offers subsequent to October 2017, but Neumann has not participated. The company is expected to hold a pre-IPO investor day on July 31, and is still considering a large debt deal prior to going public.

Go deeper: WeWork discloses earnings, CEO discloses why it might go public

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