Elon Musk’s $44bn (£35bn) takeover of Twitter could lead to multimillion-dollar payouts for its co-founder Jack Dorsey, along with key executives and board members, while staff could also share a $1bn windfall if stock options pay out.
Jack Dorsey
A regulatory filing dated 12 April, submitted ahead of the company’s annual meeting in May and after Musk’s raid on the company’s shares, discloses the major stock-holders and their stakes.
Twitter’s co-founder is in line to collect almost $1bn in cash once the deal goes through. Dorsey, who stepped down as chief executive last year after pressure from activist investor Elliott Management, still owns 18m shares, or almost 2.4% of its stock, worth $978m at Musk’s agreed offer of $54.20.
Martha Lane Fox
Other board members hold shares too, and would collect smaller amounts. Dotcom pioneer Martha Lane Fox is a director, and her 32,545 shares would be worth $1.7m (or £1.4m), while Robert Zoellick, the former US deputy secretary of state and ex-president of the World Bank, would get $1.1m.
Twitter’s former executive chairman, Omid Kordestani, would receive over $50m, based on his holding of 934,247 shares. Current chair Bret Taylor’s stake would be worth around $3m at Musk’s price.
The executives
Several Twitter executives, including Dorsey’s successor, Parag Agrawal, would collect payouts if Musk ends their employment, triggering the accelerated vesting of shares awarded as restricted stock units (a form of compensation and performance-related pay popular in Silicon Valley).
Agrawal would receive a $38.7m package if his tenure ends through a change in control (CiC) event, such as the company being taken private, a proxy statement filed this month with the SEC shows.
Ned Segal, Twitter’s chief financial officer, would receive a $25.5m payoff if his position was terminated though a CiC, while general council Vijaya Gadde would be in line for $12.5m and the chief customer officer, Sarah Personette, would receive $11.2m.
Agrawal also owns about 128,000 Twitter shares, including some exercisable and vested stock options, the proxy filing shows, which would be worth nearly $7m at Musk’s offer, while Segal’s 394,000 shares would be worth $21m. Gadde’s 600,000 shares would be valued at $32m, and Personette’s 143,000 would be worth more than $7m.
The staff
Twitter’s employees have benefited from a generous share scheme, introduced in 2013, taking as much as 50% of their earnings in stock options. About 41.7m shares can be issued in options, warrants and rights under Twitter’s equity compensation plans. Those securities would be worth over $2.2bn at Musk’s price.
But they have an average exercise price of about $27, indicating they could deliver a profit of $1bn if exercised and then cashed in at $54.20.
As well as receiving shares as options vest, staff have been able to buy Twitter stock at a 15% discount through its employee stock purchase plan. In 2021 they bought 2.2m shares at an average price of $31, for example, which would be worth a $50m profit at Musk’s offer price.
Also, about 1.5m shares in unvested restricted common stock are held by Twitter employees who joined the company through acquisitions.
Nonetheless, many now fear Musk’s acquisition will mean missing out on the long-term value of stock they hold. During the peak of last year’s tech stock rally, Twitter shares reached the $70 range, significantly above the current offer price, before falling back amid concerns about a global economic downturn.
According to the New York Times, executives have tried to assure employees that they wouldn’t be shortchanged, with Agrawal telling them their stock options would convert to cash when the deal closes.
The institutional investors
Investment giant Vanguard Group, which was just ahead of Musk as Twitter’s biggest shareholder in mid-April, would receive about $4.5bn for its 10% stake held by its various funds, such as index trackers and exchange-traded funds (ETFs).
Morgan Stanley Investment Management is the third-largest shareholder with 8.5%, worth $3.5bn, followed by BlackRock and State Street who each own 4.75%, or $2bn at Musk’s price.
