Twitter to shareholders: let Dorsey give shares to employees

Steven Loeb · May 20, 2016 · Short URL:

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

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. 

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What is Twitter?

Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests. 

Where did the idea for Twitter come from?

Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.

How is Twitter built?

Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes. 

We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.

How do you make money from Twitter?

There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.

In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet. 

At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.

Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on that were only accessible through the link in the @earlybird tweet.


What's next for Twitter?

We continue to focus on building a product that provides value for users. 

We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.