Last Updated on November 2, 2022 by Bitfinsider
Nevertheless, it appears that the current tranche of stock-based compensation for many Twitter employees who were there before to Musk’s takeover will be paid out.
Newly vesting shares will be distributed in the first part of November, beginning as early as November 4. Managers reportedly reassured employees that the company’s payroll department was processing their vested stock.
Twitter has been significantly reliant on equity payouts. It is common for IT companies to pay a high proportion of compensation in the form of stock awards. Twitter’s stock-based compensation expense increased to $459.5 million during the first half of 2022, up from $289.1 million during the same time in 2021. This is close to 20% of Twitter’s quarterly income.
Musk has repeatedly stated over the past few months that Twitter is overstaffed and that one of his first steps will be to implement drastic reductions. Starting with the CEO, CFO, policy chief, and other high-ranking officers and their immediate reports, he has already fired all top executives. Apparently, Musk terminated them “for cause” to avoid paying millions of dollars in so-called golden parachutes.
It is unclear whether other executives and employees who were terminated or resigned following Musk’s acquisition of the company will be reimbursed for upcoming vesting shares. Twitter did not respond to a request for comment immediately.
The New York Times stated that Twitter may conduct layoffs prior to November 1, the day on which many employees were slated to receive stock grants.
Musk reacted with “this is incorrect” in a tweet on Friday, but he did not provide evidence or any information.
Employees of Twitter had right to be anxious about their shares, considering that the company is now privately owned and that Musk has a history of avoiding payouts.
Gene Glaudell, a former Tesla Chief Information Officer, stated in 2009 deposition transcripts from a high-profile Tesla case, Martin Eberhard v. Elon Musk et al, that Musk and other Tesla executives at the time “did not want to acknowledge publicly that Tesla was making layoffs for financial reasons.” Instead, they attempted to credit the reductions to “performance and management responsibility.”
Approximately fifty former Tesla employees alleged in a subsequent lawsuit that they were terminated without receiving the stock payments promised in their job offer letters. Former Tesla employees prevailed, but the electric vehicle manufacturer was able to reverse the verdict on appeal.
Musk is the wealthiest person on earth, with the majority of his fortune coming from Tesla stock via the perforam and a historically enormous salary package that the firm has awarded him over the years.
This month, disgruntled Tesla shareholders plan to sue Musk and the Tesla board over his 2018 CEO remuneration package. They claim that it was irresponsible to grant Musk so much company stock and that the pay package failed to achieve its declared objective of persuading Musk to focus on Tesla’s operations.
The lawsuit will be decided by Kathaleen McCormick, the same judge who pushed Elon Musk and Twitter to resolve their disputes and finish the $44 billion transaction they agreed to in April.
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