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Twitter to shareholders: let Dorsey give shares to employees

The Twitter CEO announced a plan to give a third of his stake to employees back in October

Financial trends and news by Steven Loeb
May 20, 2016
Short URL: http://vator.tv/n/4594

As Twitter has been struggling to keep its user numbers up, as well as its stock price, one of its biggest concerns has been with keeping top talent from jumping ship. This is not a hypothetical problem either; a bunch of its executives quit en mass in January.

Twitter's solution has been to give employees stock, in the hopes that it will persuade them to stay on. In October, Jack Dorsey announced that he was giving away roughly a third of his stake in Twitter.

Dorsey still plans to go ahead with that plan, as  Vijaya Gadde, General Counsel at Twitter, wrote a letter to shareholders on Friday asking them to approve it. 

"We are asking our stockholders to approve the 2016 Plan at the Annual Meeting in order to allow us to fulfill Mr. Dorsey’s objectives of making his contributed shares available for grants to our employees," he wrote. "Mr. Dorsey and we believe our success is due to our highly talented employee base and that our future success depends on our ability to attract and retain high caliber people."

The company also announced that it has amended the plan, in order to prohibit the repricing of stock options, including through an option exchange program or cash buyout, without the consent of Twitter’s stockholders.

"We recognize the importance of protecting the value of your investment in Twitter and we also endeavor to be responsive to stockholder feedback on our compensation programs," said Gadde.

When he announced he was giving away a third of his stock, Dorsey said it was being given "to our employee equity pool to reinvest directly in our people." The total value of the stake Dorsey gave away, which was about 1 percent of the company, came to $211 million.

So far, the plan has not done much to stem the tide of executives leaving the company. Katie Jacobs Stanton, the company’s VP of global media; Kevin Weil, it's SVP of product; Alex Roetter, who is and SVP of engineering; Jason Toff, general manager at Vine; and Brian “Skip” Schipper, Twitter's Vice President of Human Resources, all of whom chose to leave Twitter at the exact same time. 

Those departures followed Mike Davidson, Twitter's Head of Design, announced he was leaving the company in December. In the two weeks prior Twitter had also lost engineer Utkarsh Srivastava, who helped the company build its ads business, and it also saw the departure of Glenn Otis Brown, who has been heading up Twitter’s video ad program. Srivastava left for Google, while Brown went to Betaworks.

In March it was also reported that the company was giving employees additional restricted stock, with the amount that each employee gets depending on how long they've been working at Twitter. 

In addition, Twitter was said to be giving employees bonuses, starting at $50,000 and going up to $200,000, in order to get them to stay another six months, or another year.

Sadly for Twitter, giving out stock might not be the best incentive right now, as the company fell to its lowest ever earlier this month, hitting $14.1 a share.

Twitter's stock rose 1.91 percent to $14.42 a share. It is down 37.68 percent year-to-date and down 44.5 percent from $26 IPO price. 

(Image source: techcrunch.com)


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