Table of Contents WEWORK COMPANIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2019 (UNAUDITED) ordinary shares which will vest annually over a five year period and had a grant date value of $3.51 per ChinaCo Class A ordinary share. The consultant is also a member of the Company’s and ChinaCo’s board of directors; however, the services required per the terms of grant are greater in scope than the individual’s responsibilities as a standard director. As of June 30, 2019, a total of 2.0 million of these shares were vested and issued. During the six months ended June 30, 2018 and 2019, the Company recorded $5.4 million and $9.0 million, respectively, of general and administrative expenses, associated with the rights to subscribe to ChinaCo ordinary shares granted to non-employee contractors for services rendered. This expense was recorded as an increase in the equity allocated to noncontrolling interests on the Company’s condensed consolidated balance sheet as of June 30, 2019. As of June 30, 2019, there was $51.1 million of total unrecognized expense related to unvested ChinaCo ordinary shares expected to be recognized over a weighted-average period of approximately 2.8 years. In November 2018, ChinaCo adopted a long-term equity incentive plan (the “ChinaCo 2018 LTEIP”), authorizing the grant of equity-based awards (including restricted stock units and stock appreciation rights) to ChinaCo employees, officers, directors and consultants. The maximum number of shares subject to awards that may be granted under the ChinaCo 2018 LTEIP is 15,723,181. All awards under the ChinaCo 2018 LTEIP that vest will be settled in the local currency of the participating subsidiary of ChinaCo, and no equity or rights as an equity holder in ChinaCo shall be granted to a recipient of any award under the ChinaCo 2018 LTEIP. During the six months ended June 30, 2019, there were a total of 771,499 stock appreciation rights granted under the ChinaCo 2019 LTEIP. Payment in respect of any stock appreciation right is conditioned upon the occurrence of an Exit Event (as defined in the ChinaCo 2019 LTEIP). In addition, awards will generally time-vest over a two or five year employment service period, though certain grantees must be employed on the date of the Exit Event in order to receive any payment. Each stock appreciation right entitles the grantee to the increase, if any, in the value of the ChinaCo stock at the time of the payment event relative to the exercise price of the applicable stock appreciation right as set forth in the applicable award agreement. The exercise prices of all outstanding stock appreciation rights are greater than the fair market value as of June 30, 2019. The unrecognized stock-based compensation expense from outstanding stock appreciation rights awarded under the ChinaCo 2018 LTEIP was approximately $9.8 million as of June 30, 2019, which to the extent the other vesting conditions are met, will only be recognized when the Exit Event become probable of occurring. As a result, there was no stock-based compensation expense recognized during the six months ended June 30, 2019 associated with the ChinaCo 2018 LTEIP. PacificCo In May 2019, PacificCo adopted a long-term equity incentive plan, (the “PacificCo 2019 LTEIP”), authorizing the grant of equity-based awards (including restricted stock units and stock appreciation rights) to its employees, officers, directors and consultants. The maximum number of awards that may be granted under the PacificCo’s 2019 LTEIP is 6,250,000. During the six months ended June 30, 2019, there were a total of 2,837,185 stock appreciation rights granted under the PacificCo 2019 LTEIP. Settlement in respect of any stock appreciation right is conditioned upon the occurrence of an Exit Event (as defined in the PacificCo 2019 LTEIP). In addition, awards generally time-vest over a two-to-five year employment service period, though certain grantees must be employed on the date of the Exit Event in order to receive any payment. In addition, a portion of the awards are also subject to additional performance-vesting and vest based on achievement of performance metrics related to PacificCo’s financial performance. Each stock appreciation right entitles the grantee to the increase, if any, in the value of the PacificCo stock at the time of the settlement event relative to the exercise price of the applicable stock appreciation right as set forth in the applicable award agreement. The award may be settled in stock of PacificCo or cash upon the occurrence of an Exit Event (as defined in the PacificCo 2019 LTEIP). The unrecognized stock-based compensation expense from outstanding stock appreciation rights awarded under the PacificCo 2019 LTEIP was approximately $15.5 million as of June 30, 2019, which to the extent the other vesting conditions are met, will only be recognized when the Exit Event becomes probable of occurring. As a result, there was no stock-based compensation expense recognized during the six months ended June 30, 2019 associated with the PacificCo 2019 LTEIP. F-121