Elon's first big move: pay to remain verified on Twitter
Under pressure to generate revenue quickly, Twitter's new CEO considers ending free verification
Source:https://www.platformer.news/p/elons..._id=81598818&isFreemail=true&utm_medium=email
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Elon Musk is reportedly strongly considering to make Twitter users pay to remain verified.
- Thread starter SBFNews
- Start date
Source:https://www.platformer.news/p/elons..._id=81598818&isFreemail=true&utm_medium=email
Jack Dorsey has rolled his entire stake of Twitter shares, worth nearly $1bn at the buyout price of $54.20, into the privately held company he founded, which is now controlled by Elon Musk. Regulatory filings show Dorsey, who was Twitter’s chief executive until late last year, rolled over some 18mn shares into the private company, making him one of its biggest shareholders. The news comes as Musk has moved swiftly to stamp his mark on the platform, firing top executives including Dorsey’s successor, Parag Agrawal, planning for broader lay-offs and ordering a revamp of the verification process. A filing on Monday confirmed that Musk, who has changed his public profile to read “Chief Twit”, is Twitter’s current chief executive. It is unclear whether he will select someone to take up the role in his stead but he is being supported by a group of loyal lieutenants including venture capitalist David Sacks and his personal lawyer Alex Spiro as he assesses Twitter’s business. Musk and Dorsey long have admired each other in a “bromance” that played a significant role in shaping the Tesla chief executive’s bid to buy the company. In private messages, revealed in court filings, Dorsey encouraged Musk to buy the platform, writing that it should have always been an “open source protocol, funded by a foundation” rather than a company. “That was the original sin,” he said. Dorsey also said he had previously tried to bring Musk on to the board of Twitter, but the directors had refused because they were too “risk averse”, referring to them as “terrible”. In public, upon the board agreeing to the takeover, Dorsey tweeted: “Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.” Dorsey left the Twitter board in May just weeks after the company announced the sale to Musk for $44bn. According to the filing, Dorsey and Musk “may be deemed to have formed a group” for the purposes of part of the filing, a designation that indicates the pair were working together on the buyout. Dorsey, however, “disclaim[ed] the existence of any such group and also disclaims beneficial ownership over any shares of common stock beneficially owned by [Musk],” according to the filing. Recommended Twitter Inc ‘Mischief and delay’: How Musk and Twitter finally sealed the deal The collapse this year in the stock prices of Twitter rivals, Snap and Meta Platforms, likely means that the value of the stakes of the rollover investors — including Musk who is putting his former 9 per cent Twitter stake into the newly private company — is far below the $54.20 per share deal price. Dorsey is the co-founder of the financial technology firm Block where he serves as chief executive. His stake in Block, formerly known as Square, is worth several billion dollars. Separately, a securities filing over the weekend showed Prince Alwaleed bin Talal bin Abdulaziz of Saudi Arabia had rolled over 35mn shares, or 3.5 per cent of the total shares of the public Twitter, into the new private company. The position has drawn scrutiny from US politicians, including Chris Murphy, a US senator from Connecticut, who expressed unease with the foreign ownership of the media company and called for an investigation into the national security implications.
After Elon Musk closed his $44 billion purchase of Twitter last week, employees at the company braced for job cuts. Some told CNBC they were worried about losing their equity compensation if Musk sent them packing before their shares vested the first week of November.
Musk and Tesla have been sued repeatedly over employees’ claims that they were fired just before their shares vested, depriving them of compensation.
However, it appears that the current tranche of stock-based compensation for many Twitter employees, who were there before Musk took over, will get paid out after all.
According to employees at the company and internal communications viewed by CNBC, newly vesting shares are expected to be paid in the first half of November, starting as early as Nov. 4. Employees said they were reassured by managers that the company’s payroll department was working on processing their vested stock.
Tech companies are known for paying a high percentage of their compensation through stock awards, and Twitter has been notably reliant on equity payouts. In the first six months of 2022, Twitter recorded a stock-based compensation expense of $459.5 million, up from $289.1 million during the same period a year earlier. That’s close to 20% of Twitter’s revenue for the quarter.
Musk has indicated many times in recent months that Twitter is overstaffed and that one of his first moves would be to make dramatic reductions. He’s already gotten rid of top executives, starting with the CEO, CFO, policy chief and other high-ranking leaders and their direct reports. Musk reportedly fired them “for cause,” potentially to avoid paying millions of dollars in so-called golden parachutes.
It’s not clear whether other executives and employees who were fired or who resigned after Musk bought the company will be compensated for shares about to vest. Twitter didn’t immediately respond to a request for comment.
Musk was scheduled to hold an all-hands meeting with Twitter employees on Nov. 2. The meeting was canceled unexpectedly, employees told CNBC.
The New York Times reported that layoffs at Twitter could take place before Nov. 1, a date when many employees were scheduled to receive stock grants.
Musk responded, “this is false,” in a tweet on Friday, though he didn’t provide any evidence or further details.
Twitter employees had some reason to be concerned about their equity, given the company is now in private hands, and because Musk has a history of apparently trying to avoid payouts.
According to 2009 deposition transcripts from a high-profile Tesla lawsuit, Martin Eberhard v. Elon Musk et al, a former Tesla Chief Information Officer named Gene Glaudell said Musk and other Tesla executives at that time, “did not want to say in public that Tesla was making cuts for financial reasons.” Rather, they tried to attribute the cuts to “performance and management accountability.”
In a lawsuit after that, about 50 former Tesla employees claimed the company had terminated them without paying equity compensation that they’d been promised in job offer letters. The former Tesla employees won, but the electric vehicle maker was able to overturn the decision later on appeal.
Musk is the richest person on the planet, with most of his wealth derived from Tesla stock via the perforam and a historically large compensation package that the company has granted him through the years.
Some unhappy Tesla shareholders are slated to take Musk and the Tesla board to court this month over his 2018 CEO compensation package. They allege that it was reckless to give away so much of the company’s stock to Musk, and that the pay package failed to achieve its stated purpose of getting him to focus on Tesla’s business.
Kathaleen McCormick, the same judge who encouraged Musk and Twitter to settle their differences and complete the $44 billion transaction they agreed to in April, is deciding the case.
Musk and Tesla have been sued repeatedly over employees’ claims that they were fired just before their shares vested, depriving them of compensation.
However, it appears that the current tranche of stock-based compensation for many Twitter employees, who were there before Musk took over, will get paid out after all.
According to employees at the company and internal communications viewed by CNBC, newly vesting shares are expected to be paid in the first half of November, starting as early as Nov. 4. Employees said they were reassured by managers that the company’s payroll department was working on processing their vested stock.
Tech companies are known for paying a high percentage of their compensation through stock awards, and Twitter has been notably reliant on equity payouts. In the first six months of 2022, Twitter recorded a stock-based compensation expense of $459.5 million, up from $289.1 million during the same period a year earlier. That’s close to 20% of Twitter’s revenue for the quarter.
Musk has indicated many times in recent months that Twitter is overstaffed and that one of his first moves would be to make dramatic reductions. He’s already gotten rid of top executives, starting with the CEO, CFO, policy chief and other high-ranking leaders and their direct reports. Musk reportedly fired them “for cause,” potentially to avoid paying millions of dollars in so-called golden parachutes.
It’s not clear whether other executives and employees who were fired or who resigned after Musk bought the company will be compensated for shares about to vest. Twitter didn’t immediately respond to a request for comment.
Musk was scheduled to hold an all-hands meeting with Twitter employees on Nov. 2. The meeting was canceled unexpectedly, employees told CNBC.
The New York Times reported that layoffs at Twitter could take place before Nov. 1, a date when many employees were scheduled to receive stock grants.
Musk responded, “this is false,” in a tweet on Friday, though he didn’t provide any evidence or further details.
Twitter employees had some reason to be concerned about their equity, given the company is now in private hands, and because Musk has a history of apparently trying to avoid payouts.
According to 2009 deposition transcripts from a high-profile Tesla lawsuit, Martin Eberhard v. Elon Musk et al, a former Tesla Chief Information Officer named Gene Glaudell said Musk and other Tesla executives at that time, “did not want to say in public that Tesla was making cuts for financial reasons.” Rather, they tried to attribute the cuts to “performance and management accountability.”
In a lawsuit after that, about 50 former Tesla employees claimed the company had terminated them without paying equity compensation that they’d been promised in job offer letters. The former Tesla employees won, but the electric vehicle maker was able to overturn the decision later on appeal.
Musk is the richest person on the planet, with most of his wealth derived from Tesla stock via the perforam and a historically large compensation package that the company has granted him through the years.
Some unhappy Tesla shareholders are slated to take Musk and the Tesla board to court this month over his 2018 CEO compensation package. They allege that it was reckless to give away so much of the company’s stock to Musk, and that the pay package failed to achieve its stated purpose of getting him to focus on Tesla’s business.
Kathaleen McCormick, the same judge who encouraged Musk and Twitter to settle their differences and complete the $44 billion transaction they agreed to in April, is deciding the case.
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