Elon Musk’s Twitter profile page is visible on an Apple iPhone mobile phone.
Nurphoto Nurphoto Getty Images
After Elon Musk closed his $44 billion acquisition Twitter last week, the workers in this company are facing job cuts. Some told CNBC they are worried about losing their equity compensation if Musk sends them packing before their shares vest in the first week of November.
Musk again Tesla have been sued several times due to employee allegations that they were fired shortly before they were given shares, depriving them of compensation.
However, it seems that the current episode of stock-based compensation for many Twitter employees, who were there before Musk took over, will be paid after all.
According to employees at the company and internal communications seen by CNBC, the newly issued shares are expected to be paid in the first half of November, starting November 4. The employees said they were assured by management that the company’s payroll department is working. in processing their shares.
Tech companies are known for paying a high percentage of their compensation in stock awards, and Twitter is notably reliant on equity payouts. In the first six months of 2022, Twitter recorded stock-based compensation expense of $459.5 million, up from $289.1 million in the same period last year. 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 steps will be major layoffs. He has already parted ways with senior executives, from the CEO, CFO, chief policy officer and other senior leaders and their direct reports. Musk reportedly fired them for “reason,” possibly to avoid paying millions of dollars in so-called golden parachutes.
It is not clear whether other executives and employees who were fired or resigned after Musk bought the company will be compensated with the shares that will be used. Twitter did not 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 unexpectedly canceled, employees told CNBC.
The New York Times reported that layoffs at Twitter could happen before Nov. 1, the day when most employees were scheduled to receive stock grants.
Musk responded, “this is false,” to a tweet on Friday, although he did not provide evidence or other details.
Twitter employees had some reason to worry about their equity, since the company is now in private hands, and because Musk has a history of trying to avoid getting paid.
According to 2009 deposition documents from the high-profile Tesla case, Martin Eberhard v. Elon Musk et al, a former Tesla Chief Information Officer named Gene Glaudell said that Musk and other Tesla executives at the time, “did not want to say publicly that Tesla was cutting back for financial reasons.” Instead, they tried to point to a reduction in “operations and management accountability.”
In a lawsuit after that, about 50 former Tesla employees claimed that the company fired them without paying the compensation for their shares that they were promised in their employment letters. The former Tesla employees won, but the electric car maker was able to overturn the decision later on appeal.
Musk is the world’s richest man, with most of his wealth coming from Tesla stock through performance and the historically large compensation package the company has given him over the years.
Some unhappy Tesla shareholders are expected to take Musk and Tesla’s board to court this month over his 2018 CEO compensation package. They allege that it was reckless to give Musk too much of the company’s stock, and that the pay package failed to achieve its goal of keeping him focused on Tesla’s business.
Kathaleen McCormick, the same judge who encouraged Musk and Twitter to settle their differences and complete the $44 billion deal they agreed to in April, is ruling the case.
WATCH: Twitter is now Elon Musk’s company