(Reuters) - Japan's SoftBank Group Corp 9984.T, the biggest investor in WeWork owner The We Company, is exploring ways to replace Adam Neumann as chief executive of the U.S. office-sharing start-up, four people familiar with the matter said on Sunday.

FILE PHOTO: Adam Neumann, CEO of WeWork, speaks to guests during the TechCrunch Disrupt event in Manhattan, in New York City, NY, U.S. May 15, 2017. REUTERS/Eduardo Munoz -/File Photo

The rare showdown between SoftBank and one of its biggest investments comes after We Company postponed its initial public offering (IPO) last week, following pushback from perspective investors, not just over its widening losses, but also over Neumann’s unusually firm grip on the company.

This was a blow for SoftBank, which was hoping for We Company’s IPO to bolster its profits as it seeks to woo investors for its second $108 billion Vision Fund. It invested in We Company at a $47 billion valuation in January, yet stock market investor skepticism led to the start-up considering a potential valuation in the IPO earlier this month of as low as $10 billion, Reuters reported.

What was the venture capital world’s biggest upset is now morphing into one of corporate America’s most high-profile boardroom dramas.

Some We Company board directors are deliberating how to replace Neumann as CEO, the sources said. The exact number of directors opposed to Neumann is not clear. Venture capital firm Benchmark Capital, another big investor in We Company, would also like Neumann to step aside, one of the sources said.

Benchmark, SoftBank and Chinese private equity firm Hony Capital each have one representative on We Company’s seven-member board, that includes Neumann. Hony Capital’s position on whether Neumann should remain CEO could not immediately be learned.

A formally unaffiliated We Company board director, retired Goldman Sachs Group Inc GS.N investment banker Mark Schwartz, previously sat on SoftBank's board.

No challenge to Neumann has yet been tabled, the sources said. A We Company board meeting will be held this week, and the issue of his leadership could be raised then, the sources added.

One option that SoftBank is considering is asking Neumann to become interim CEO while a headhunting firm is hired to find an external replacement, the first source said.

The sources asked not to be identified because the matter is confidential. We Company and SoftBank declined to comment, while Neumann, Schwartz, Benchmark Capital and Hony Capital could not be immediately reached for comment. The Wall Street Journal first reported on SoftBank exploring ways to replace Neumann as CEO.

As co-founder of the We Company, Neumann holds special voting shares that enable him to dismiss dissident board directors and shoot down any challenge to his authority. However, SoftBank could choose not to back We Company’s IPO or provide it with more funding. It has already funded the cash-burning start-up to the tune of $10 billion, and was discussing committing another $1 billion to the IPO.

We Company said last week it is aiming to become a publicly traded company by the end of the year.

In a sign of souring relations between SoftBank and WeWork, Neumann did not participate in a gathering of executives of companies backed by SoftBank that took place in Pasadena, California, last week and was organized by SoftBank CEO Masayoshi Son, according to two people familiar with the matter.

Were a board challenge against Neumann to prove successful, it could follow the template of Uber Technologies Inc UBER.N.

Uber co-founder Travis Kalanick resigned as CEO of the ride-hailing start-up in 2017 after facing a rebellion from his board over a string of scandals, including allegations of enabling a chauvinistic and toxic work culture. Uber replaced Kalanick with an outsider, former Expedia Group Inc Expel CEO Dara Khosrowshahi, and completed its IPO last May.

PUSHING THE CORPORATE GOVERNANCE ENVELOPE

It is not uncommon for founders of fast-growing start-ups to be eccentric and control their companies tightly, even as they seek to attract stock market investors. Neumann, however, was criticized by investors and corporate governance experts for arrangements that went beyond the typical practice of having majority voting control through special categories of shares.

These included giving his estate a major say in his replacement as CEO, and tying the voting power of shares to how much he donates to charitable causes.

Neumann also entered into several transactions with We Company over the years, making the company a tenant in some of his properties and charging it rent. He has also secured a $500 million credit line from banks using company stock as collateral.

Following criticism by potential investors, Neumann agreed to some concessions without relinquishing majority control. He agreed to give We Company any profit he receives from real estate deals he has entered in to with the New York-based start-up.

No member of Neumann’s family will be on the company’s board and any successor will be selected by the board, scrapping a plan for his wife and co-founder, Rebekah Neumann, to help pick the successor.

These changes did little to address concerns about We Company’s business model, which rents out workspace to clients under short-term contracts, even though it pays rent for them itself under long-term leases. This mix of long-term liabilities and short-term revenue raised questions among investors about how the company would weather an economic downturn.