With Elon Musk’s $44 billion takeover of the social platform, three of Twitter’s top executives who were reportedly fired after the deal was struck on Thursday are set to collect more than $100 million severance pay and share payments previously granted.
CEO Parag Agrawal, who took office less than a year ago, is eligible to receive around $50 million, according to calculations by Bloomberg News. Chief Financial Officer Ned Segal and Vijaya Gadde, Head of Legal, Policy and Trust, are pending around $37 million and $17 million each, respectively.
The three and other major Twitter executives were among those quitting after Musk took over as CEO of the social media giant on Thursday, people familiar with the matter said. Their exits cap more than six months of public and legal wrangling that ended with Musk, the world’s richest person, grabbing the CEO job.
Like many top executives at large public companies, Agrawal and his lieutenants were entitled to severance pay equal to one year’s salary and unearned stock withdrawals if Twitter was purchased and they lost their jobs in the process. , under the terms of the company. dismissal policy. Twitter must also cover their health insurance premiums for a year, amounting to around $31,000 each.
Critics often point to the unfairness of handing bosses golden severance packages when normal employees who lose their jobs after a merger or takeover hardly get such a soft landing. Golden parachute advocates say they let executives focus on what’s best for shareholders instead of worrying about whether they’ll be replaced if a deal is struck.
In the case of Agrawal, 38, who had been at Twitter for nearly a decade, he was adamant that the company complete the acquisition of Musk at $54.20 a share, even though the co-founder of Tesla Inc. said it had no confidence in management. . Text messages uncovered during the trial over the deal show the pair had a contentious text exchange early in the process after Musk asked his followers if Twitter was “dying”.
A representative for Twitter did not immediately respond to a request for comment. Before closing the deal on Thursday — in an apparent hint that the deal would close — Musk had strolled through the company’s San Francisco headquarters on Wednesday wearing a porcelain sink as he tweeted, “Entering the headquarters of Twitter – let it flow!” Then on Thursday he tweeted, “the bird is released,” a reference to the Twitter logo.
THE DRAMA BEGINS FOR THE BANKS
With the months-long precarious buyout ending on Thursday, the saga is far from over for debt bankers on Wall Street as they will need to convince investors that the lofty ambitions of “Chief Twit”, the name Musk s is coined earlier this week, can justify its heavy debt burden by buying out the business.
A Morgan Stanley-led cohort that provided about $13 billion in debt financing to help fund the Twitter acquisition is now saddled with risky loans it never intended to keep in its books. Banks now face the difficult task of selling it without making big losses – and it’s not going to be easy.
For starters, the cost of borrowing has skyrocketed.
Yields on junk bonds in the CCC tier, where Twitter’s riskiest unsecured debt will likely be rated, climbed to 15.4%, well above the maximum interest rate of 11.75% that investors banks promised Musk on this part of the debt financing.
It would force the banks to offer deep discounts if they tried to offload it to institutional investors at current rates, and they are liable for the difference – to the tune of losses of more than $500 million for all debt.
Banks and Musk will also have to explain why Twitter’s spam problem isn’t a problem and how the company can sustain the huge annual interest charge that amounts to nearly $1.2 billion a year. according to an estimate.
Without a quick turnaround plan and new sources of revenue and cost reductions, Twitter will burn money.
Musk plans to take on the role of CEO of Twitter, taking the social media giant’s lead from Tesla Inc. and SpaceX. He intends to replace Agrawal, who was fired along with other top executives at the end of the takeover, Bloomberg reported.
The controversial deal, also funded with $33.5 billion of equity from Musk and other backers, has left many constituencies unhappy, including Twitter employees, some users of the global platform and no doubt Musk himself given the purchase price which now seems far too high given the stock market crash.
Winning the mandate to support the acquisitive ambitions of the world’s richest man was supposed to be a coup in April. Morgan Stanley provided the largest commitment, followed by Bank of America, Barclays and Mitsubishi UFJ Financial Group Inc. Representatives of the three banks declined to comment.
The $44 billion takeover marks the biggest so-called suspended deal for a leveraged buyout this year, and one of the biggest on record. The Twitter deal is just one of many troubled leveraged buyout deals causing trouble on Wall Street in this latest cycle, albeit on a much smaller scale than during the Great Recession, when banks were faced with an arrears of debt of more than 200 billion dollars.
Banks have already used about $30 billion of their own cash this year to fund loans for acquisitions and buyouts they couldn’t sell to investors, and Twitter’s addition to the pile brings that figure up. over $40 billion.
RACIST TWEETS SURFACE QUICKLY
An emboldened cast of Anonymous trolls spat racist slurs and Nazi memes on Twitter in the hours after Musk took over the social network on Thursday, raising fears that his promise of unrestricted free speech could fuel a new wave of hate online.
Twitter has struggled to enforce its rules against harassment and extremism, and the company has yet to release wide-ranging changes to its content moderation policies.
But Musk, a self-proclaimed ‘free speech absolutist’, has sharply criticized the company’s former executives as being too rigid and repressive and said he would work to overturn some of the key enforcement mechanisms. company, such as the indefinite suspension of accounts.
A wide range of anonymous Twitter accounts celebrated Musk’s takeover and argued that it meant the old rules against bigotry no longer applied.
In a letter tweeted Thursday, Musk had sought to appease advertisers worried about the moderation changes by saying he didn’t want it to become a “free-for-all hellscape.”
But the first hours of its purchase showed how difficult that promise could be.
One account, created this month, included a Nazi swastika as a profile picture and retweeted quotes from Musk alongside anti-Semitic memes. Another tweet, showing a video montage glorifying Nazi Germany with the comment “I hear there have been changes here”, has been liked more than 400 times.
Racial slurs were posted rampantly overnight.
A one-word tweet, showing a single all-caps racial slur, has been retweeted over 500 times and liked over 4,000 times. It was tweeted late Thursday evening and remained online nearly 12 hours later.
Some of the Twitter influx was staged on other platforms, including pro-Donald Trump forum TheDonald, where its main posts on Friday morning showed tweets celebrating claims about Trump’s election defeat in 2020 and memes criticizing transgender people under the title “When you can’t get banned on Twitter anymore.”
“Cold Meme War, Twatter Defenses Down, Fire Away,” read another poster, attaching an image of a soldier with a gun and a “Make America Great Again” hat.
Musk pledged in May to lift former President Trump’s permanent ban from the platform – stemming from tweets related to the Jan. 6 Capitol riot – though Trump signaled he would not return , after launching his own social network, Truth Social.
Information for this article was provided by Anders Melin and Paula Seligson of Bloomberg News (WPNS) and Drew Harwell of The Washington Post.