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Elon Musk tried to buy Twitter. He attempted to rescind that attempt, but was eventually forced to close the deal.
A new study, however, sheds new light on the acquisition’s impact on Twitter employees and how Twitter’s key executives and board abandoned the social media platform’s mission statement and core values.
According to the study How Twitter Put Stakeholders under The Bus (titled How Twitter Pushed them Under the Bus),:
“When negotiating the deal, Twitter’s corporate leaders chose to focus exclusively on the interests of their shareholders and the private interests of corporate leaders themselves. Despite their stakeholder rhetoric over the years, Twitter’s corporate leaders essentially chose to push their stakeholders under the (Musk) bus.”
Is This How Much did Twitter Insiders Earn on the Deal?
With Musk’s offer to acquire Twitter at a 38% stock price premium, it’s not surprising that Twitter’s top four executives made a lot of money on the deal.
Stock price premium perspectives, the top four executives earned $74.3million from the shares that they owned. Gains weren’t limited to the price premium. Restricted and performance stock units (RSUs and PSUs) added $138 million to the executive team’s payday.
8 non-executive directors made it to the top, with $68M in share price appreciation, $20M from stock options and $5M in RSUs/PSUs.
Twitter Boardroom: Hypocrisy
What did the executive team and board do to protect Twitter employees’ interests? It wasn’t much. The study found:
“Given that any acquisition might be followed by layoffs, and that this risk was clear and present in the case of the Twitter acquisition, it might be expected that employee-oriented corporate leaders would seek to use some part of the surplus created by the deal to cushion employees who stood to lose their employment.”
This is a poor expectation.
The agreement placed no limitations regarding the scale and speed with which Musk could fire his new “tweeps” (the company’s term for its employees). The study found that the deal did not offer any compensation for layoff workers or monetary benefits. In fact, Twitter was prohibited from making such promises to employees between the closing and signing of the deal.
The study’s authors pointed out:
“Employee-oriented corporate leaders could have declined to tie their hands from amending the terms of employee contracts. Given the small size of this monetary commitment relative to the deal premium or acquisition price, retaining the board’s power to make such promises to employees should have been expected not to preclude the deal but at most require a minor adjustment in other deal terms.”
Reuters reported that, in April 2022, Twitter CEO Parag Agrawal reassured employees there were no plans for layoffs, while Twitter’s board chair told them that the agreement prioritized “operating continuity.”
[Note: The board chair’s comment wasn’t misleading. Twitter appears to be operating just fine with half the staff it had pre-takeover.]
Twitter was required to make steps to ease or reduce the suffering of imminent post-deal layoffs No. They were hypocritical to do so.
People First. My Feet
This was the company, remember, that had a webpage dedicated to “Tweep Life” that claimed “We put people first. Together we’re creating a culture that’s supportive, respectful, and a pretty cool vibe.”
The company’s careers page told prospective employees “we take care of the whole you—from physical and mental to financial and professional. So no worries, we got you.”
That promise is a great one. According to the researchers, this is the conclusion of their study:
“The Twitter deal suggests that the importance attached to purpose and mission statements is misplaced. Twitter’s corporate leaders had long engaged in pro-stakeholder rhetoric regarding the company’s mission and purposes. Nonetheless, they disregarded these statements and attached little if any weight to protecting the mission, purpose, and core values to which they had publicly been committed to.”
Musk Drives The Bus
For his part, Elon Musk didn’t do much to help the plight of Twitter employees—laid off or retained. The academic study shows:
“Employees who used to work from home before the acquisition were reportedly also targeted for the layoffs. Musk allegedly declined to accept a suggestion from Twitter executives to conduct a diversity and inclusion assessment to ensure the cuts would not disproportionately affect people of color.”
Musk ordered employees of Twitter to complete 80 hour work weeks and that they be available at the office for 40 hours after signing the agreement. Exceptions would require Musk’s personal review and approval.
A few weeks later, Musk required Twitter employees to commit—via a Google form—to staying with the company with the understanding that they would have to work long hours at high intensity or leave the company.
Musk’s Twitter Bus: How Much Do You Pay?
Musk was a genius ReallyHe ran over employees of Twitter who were under the bus. Or did he simply charge them an exorbitant fare?
Not too long ago, it wasn’t unusual for people building a new company or even a new career to put in long hours (lawyers and Wall Streeters will back me up on this one).
Musk was wrong to ask for hard work commitments (I shudder at this thought).
Perhaps the bigger problem—and impetus for Musk’s actions—was Twitter’s management team’s inability to efficiently manage its workforce and their proclivity to coddle Tweeps with feel-good bromides that were never realistic.
Social Media Stakeholderism: Beyond Twitter
Stakeholderism—the idea that corporate leaders should look beyond shareholders and strive to serve all of a company’s stakeHolders include employees and community members.)—has gained currency over the past few years.
The trend’s critics point out that many corporate leaders have incentive to do so. NotStakeholder rights should be protected beyond shareholder interests.
Twitter and Elon Musk performed a disservice to stakeholderism.