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Prices are latest for edition Data provided by MorningstarBILLY NAUMAN— NEW YORKAmong the many unusual revelations
in WeWork’s prospectus for an initial
public offering, co-founder Adam Neu-
mann and his wife Rebekah have
promised to donate $1bn of their for-
tune to charity over the next decade —
and will lose half their voting power
over the company if they do not.On its face this appears to be a combina-
tion of altruism and tax planning that
has become common among billion-
aires, but by linking their $1bn pledge to
maintaining tight voting control the
couple may have forfeited a tax break
that US entrepreneur-philanthropists
typically exploit, experts say.
The donations may not count as
“gifts” as defined by the US Internal
Revenue Service because the Neu-manns are required to make them to
retain full voting rights, said Brian Mit-
tendorf, chair of the accounting depart-
ment at Ohio State University.
US taxpayers are allowed to deduct
charitable gifts from their income to cut
their income tax bill. If the gifts consist
of shares there is also a capital gains tax
benefit. “The deductibility of any of
those gifts is in question because it’s part
of a contractual obligation,” Mr Mitten-
dorf said. “If [Mr Neumann] doesn’t
make those donations he loses control,
so there are questions about whether it
is ‘no strings attached’.”
WeWork declined to comment. The
prospectus said the philanthropic com-
mitments made by the Neumanns and
other senior executives were designed
to “amplify the positive global impact of
our organisation”.
The Neumanns have already madetheir first contribution, the company
said, to help fund conservation of more
than 20m acres of intact tropical forest.
Phil Hackney, an associate professor
of law at the University of Pittsburgh,
compared the WeWork case to the so-
called blue-state workarounds mooted
after the Trump tax reform of 2016. The
new law limited the deductibility of
state and local taxes from individuals’
federal income tax, so some states sug-
gested reclassifying taxes as charitable
donations.
However, there has not been a case
entirely analogous to WeWork’s, in
which the Neumanns and the other sen-
ior executives will have their power cut
from 20 votes per share to 10 if they do
not meet their commitments. “It’s pos-
sible that the IRS could view it a differ-
ent way. But on its face, it raises real
issues,” Mr Hackney said.Fine print on WeWork founders’ $1bn
charity pledge puts tax break at risk
© THE FINANCIAL TIMES LTD 2019
No: 40,171★Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, DohaCorporate person in the newsiPAGE 9Air of melodrama haunts
sleuth making GE claimSATURDAY 17 AUGUST/SUNDAY 18 AUGUST 2019Europe edition
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North Macedonia DenKerouac, but cleaner
On the road in an e-car
Kerouac, but cleaner
On the road in an e-car
LIFE & ARTS
FT BIG READ BIG READ
Inverted curves
Bond market sounds
recession alarm
LIFE & ARTS
Tired and angry
Antonio Banderas on quitting
Hollywood
So you think you could run
a vineyard?
HOUSE
& HOMELIFE & ARTS
Out of time The sad decline
of the piano
SUE-LIN WONG AND HUDSON LOCKETT
HONG KONG
Cathay Pacific replaced its chief execu-
tive yesterday after Beijing moved to
pull Hong Kong businesses into line over
anti-government protests that have
plunged the territory into its worst
political crisis in decades.
The decision to replace Rupert Hogg
followed an accusation from Beijing’s
aviation regulator that Cathay was
putting flight safety at risk after several
of the airline’s employees allegedly par-
ticipated in the protest movement.
In an unprecedented development for
a Hong Kong private sector company,
the management change was firstrevealed by mainland Chinese state-run
media rather than Cathay.
“This is my first time seeing some-
thing like this happen over my career
here in Hong Kong covering stocks,”
said Ivan Su, an analyst at Morningstar.
“We are talking about a Hong Kong
company, not a Chinese company. This
happens with Chinese companies.”
John Slosar, Cathay chairman who
last week defended his employees’
freedoms, said the airline’s commit-
ment to safety had been called into
question and its reputation put under
pressure.
“We therefore think it is time to put a
new management team in place whocan reset confidence and lead the airline
to new heights.”
Hong Kong’s flag carrier has become
the most high-profile business in the
international financial hub to be caught
between Beijing and the protests.
Li Ka-shing, Hong Kong’s richest
man, yesterday weighed in after months
of silence with front-page newspaper
advertisements calling for an end to vio-
lence. The 91-year-old property mag-
nate called on his fellow citizens to love
the territory and China.
The protests started as opposition to a
proposed extradition law but have since
expanded to include demands for dem-
ocratic reforms. This has drawn the ireof Beijing, which has massed paramili-
tary policeon the border, sparking fears
of a military intervention.
According to a stock exchange filing
from Cathay, Mr Hogg “confirmed that
he has resigned to take responsibility as
a leader of the company in view of
recent events and that he is not aware of
any disagreement with the board”.
Cathay has fired four employees,
including two pilots, since the protests
began. The board appointed Augustus
Tang, group chief executive of Hong
Kong Aircraft Engineering Co, a subsidi-
ary of Swire Pacific, as new chief.
Beijing pushed to the brinkpage 3
Billionaires sufferpage 11Beijing pressure claims Cathay scalp
3 Hogg replaced as chief 3 China says staff joined protests 3 Heat on Hong Kong business
No sale
Greenland
spurns Trump
Greenland is not for sale, despite over-
tures made by Donald Trump to buy the
world’s biggest island.
The government of Greenland, a self-
governing Danish territory in the Arctic,
has rejected the idea. Aligning Copen-
hagen with Greenland, Jeppe Kofod,
Denmark’s new centre-left foreign min-
ister, said the island could not be bought
“in dollars, yuan or roubles”.
Greenland has big potential in natural
resources, including rare earth metals,
oil and gas. Such a brazen move by the
US would alarm Russia, which seeks to
exert more control over the frozen
north.
Reports laughed offpage 2 Frozen out: the harbour and town of Tasiilaq, Greenland. The idea of sale to Donald Trump has been rebuffed by the island— Lucas Jackson/ReutersRupert Hogg’s
removal at
Cathay Pacific
was first
revealed by
Chine state-run
media, rather
than the airline
РЕ
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