Elon Musk is said to have told lenders he'll slash executive pay at Twitter and monetize tweets to make the firm more profitable befor...
Elon Musk is said to have told lenders he'll slash executive pay at Twitter and monetize tweets to make the firm more profitable before buying it for $44 billion.
Musk is said to have made the vow to banks before securing funding to buy the firm, with the deal announced Monday.
Currently, Twitter spends about $2.9 million in cash and stock awards to board members, according to a filing.
But the firm's top executives receive far more annually, and could also find their pay in the firing line.
CEO Parag Agrawal only took over in November, but is set to earn a cool $30 million in 2022, thanks largely to $29 million of stock options he was given as part of his promotion.
Reuters reported that Musk already has Agrawal's replacement lined up, but did not say who it will be.
Agrawal, who took over from co-founder and former CEO Jack Dorsey, has a 'Change in Control' clause in his contract, The Hollywood Reporter said, citing Twitter's most recent proxy filing.
That would mean he receives a $38million payout if he's fired.
And Vijaya Gadde, Twitter's chief legal officer is also likely to face a huge pay cut - if she stays.
She earned a salary of $600,000 last, year, as well as a whopping $17 million in stock options. Musk has already taken Gadde - nicknamed the 'moral authority of Twitter' to task for censoring factual stories about Hunter Biden's laptop.
The Tesla magnate, 50, agreed to pay shareholders $54.20 in cash for each share of common stock before the bombshell deal was struck
Twitter CEO Parag Agrawal (left) and co-founder Jack Dorsey (right) also hold board seats. Dorsey said prior to Musk's takeover that he intended to step down in May, and Agrawal is also expected to leave. Both will get massive pay days thanks to their shares: Agrawal with $39 million, and Dorsey with $928 million
Elon Musk, 50, on Tuesday responded to a report about Twitter's lawyer Vijaya Gadde (left) crying at the news of his takeover. Gadde, who earned $17 million last year, could be among the executives to leave when Musk's deal is finalized
His total compensation for 2021 was $30.4 million, according to Twitter's proxy, largely in stock awards.
Dorsey is in line to receive a $978 million payout after Musk bought the social media network he created.
He owns 18,042,428 shares in the firm - equivalent to 2.4 per cent of the company - which Musk will now buy for $54.20 each, netting him close to a billion dollars.
The current chair of the board, Bret Taylor, is in line to receive a cash payout just over $3 million when the deal goes through.
He could also face being ousted.
Musk made the pitch to the lenders as he tried to secure debt for the buyout days after submitting his offer to Twitter on April 14, the sources told Reuters.
Chairman of the board, Bret Taylor, said of the deal: 'We believe it is the best path forward for stockholders'. He added that the board had 'conducted a thoughtful and comprehensive process to assess Elon's proposal'
His submission of bank commitments on April 21 were key to Twitter's board accepting his 'best and final' offer.
Musk had to convince the banks that Twitter produced enough cash flow to service the debt he sought.
In the end, he clinched $13 billion in loans secured against Twitter and a $12.5 billion margin loan tied to his Tesla stock.
He agreed to pay for the remainder of the consideration with his own cash.
Musk's pitch to the banks constituted his vision rather than firm commitments, the sources said, and the exact cost cuts he will pursue once he owns Twitter remain unclear.
The plan he outlined to banks was thin on detail, the sources added.
Musk has tweeted about eliminating the salaries of Twitter's board directors, which he said could result in about $3 million in cost savings.
Twitter's stock-based compensation for the 12 months ending December 31, 2021 was $630 million, a 33 percent increase from 2020, corporate filings show.
In his pitch to the banks, Musk also pointed to Twitter's gross margin, which is much lower than peers such as Meta's Facebook and Pinterest, arguing this leaves plenty of space to run the company in a more cost-efficient way.
Bloomberg News reported earlier on Thursday that Musk specifically mentioned job cuts as part of his pitch to the banks.
One of the sources said that Musk will not make decisions on job cuts until he assumes ownership of the company later this year.
He went ahead with the acquisition without having access to confidential details on the company's financial performance and headcount.
Musk told the banks he also plans to develop features to grow business revenue, including new ways to make money out of tweets that contain important information or go viral, the sources said.
Elon Musk (pictured last year) is 'putting a lot of skin in the game' in his dramatic takeover attempt of Twitter, experts have warned
Ideas he brought up included charging a fee when a third-party website wants to quote or embed a tweet from verified individuals or organizations.
In a tweet earlier this month he subsequently deleted, Musk suggested a raft of changes to the social media giant's Twitter Blue premium subscription service, including slashing its price, banning advertising and giving an option to pay in the cryptocurrency dogecoin.
Twitter's premium Blue service now costs $2.99 a month.
In another tweet he deleted, Musk said he wants to reduced Twitter's dependence on advertising for much of its revenue.
Musk, whose net worth is pegged by Forbes at $246 billion, has indicated he will support the banks in marketing the syndicated debt to investors, and that he may unveil more details of his business plan for Twitter then, the sources said.
Musk has also lined a up a new chief executive for Twitter, one of the sources added, declining to name the identity of that person.
The Tesla Inc chief executive also told the banks he will seek moderation policies on the social media platform that are as free as possible within the legal constraints of each jurisdiction Twitter operates, the sources said, a position that Musk has repeated publicly.
The $13 billion Twitter loan is equivalent to seven times Twitter's 2022 projected earnings before interest, taxes, depreciation and amortization. This was too risky for some banks who decided to participate only in the margin loan, the sources said.
Another reason some banks opted out is because they feared Musk's unpredictability could result in an exodus of talent from Twitter, harming its business, according to the sources.
The tycoon has already begun criticizing executives, including Twitter's top lawyer, Vijaya Gadde, 48.
He issued a scathing tweet in response to reports Gadde, 48, had been crying at news of the deal.
He wrote: 'Suspending the Twitter account of a major news organization for publishing a truthful story was obviously incredibly inappropriate.'
Musk was referring to the suspension of the New York Post's account for its exclusive about Hunter Biden's laptop in the run-up to the 2020 election.
Initially dismissed as 'misinformation' by liberal outlets and social media networks, the laptop and its contents have since been verified by many of the same publications.
Gadde - who's described as Twitter's 'moral authority' - broke down in tears on Monday, Politico reported.
She did so while briefing her team via videolink on the future of the company under Musk, following his $44 billion deal to takeover the company.
Her future at the firm now looks shaky after her latest behavior was brought to the attention of the notoriously ruthless Musk.
He is likely to slash Twitter's policies on hate speech and misinformation, having previously branded himself a free-speech absolutist.
Twitter staff have been told their jobs are safe for the six months the transfer of ownership is expected to take.
But after that, workers like Gadde are likely to be among the first to get the boot.
Musk is expected to introduce an array of changes to the company
The tweet Elon Musk replied to is pictured, top, with the tycoon's scathing attack on Vijaya Gadde's behavior right underneath
She was pivotal in the decision to ban Donald Trump from the platform for inciting unrest, and also played a key role in the decision to remove The New York Post's account when they tweeted their reporting into Hunter Biden's laptop.
Twitter initially froze the New York Post's main account after it published the story and demanded it delete tweets linking to the Biden articles.
It justified the ban by citing a prohibition of distributing hacked material, before backing down when the story was proven to be legitimate.
Saagar Enjeti, host of a conservative YouTube show, tweeted a link to Politico's report about Gadde's tears, commented: 'Vijaya Gadde, the top censorship advocate at Twitter who famously gaslit the world on Joe Rogan's podcast and censored the Hunter Biden laptop story, is very upset about the @elonmusk takeover.'
Gadde's tears, Politico reported, were in response to concerns about how the company could change.
Twitter spokesperson Trenton Kennedy told Politico that Gadde 'became emotional when discussing her team's impact and the pride she feels in them.'
Having joined Twitter in 2011, she is central to the social media's policy on hate speech, misinformation, advertising and censorship.
Musk has made clear that he intends to remove many of the restrictions currently in place, and open Twitter up as a forum for free speech.
Critics have expressed concern about how this will play out.
The world's richest man Elon Musk on Monday secured a blockbuster $44billion deal to buy Twitter, in one of the most dramatic takeovers in corporate history
Gadde joined Twitter in 2011 and is considered instrumental to decisions to ban Donald Trump, temporarily disable The New York Post's account, and curb hate speech
Gadde is pictured in 2015 with her husband, Ramsay Homsany. At the time, he was general counsel for Dropbox
On Tuesday, the billionaire blasted the 'extreme antibody reaction' from 'those who fear free speech' and said it 'says it all' as he launched his first public backlash against the woke workers.
He said if people wanted to censor free speech further they 'will ask government to pass laws to that effect'.
But he added he will not go beyond the law, because it would be 'contrary to the will of the people'.
On Monday, after the announcement, Twitter blocked its developers from making changes to the app to prevent it being sabotaged by left-wing staff.
Meanwhile commentators continued to warn of the supposed issues of Musk taking command, with hosts of The View among the latest to launch attacks on the entrepreneur.
Sunny Hostin made a bizarre claim about his plans being 'about free speech of straight white men', while Joy Behar took a guest to task for saying Trump was 'horrible but hilarious' on Twitter.
Left-leaning celebrities led the charge away from the platform overnight as they said they had to abandon it because his 'free speech bid' would end in 'lawless hate, bigotry and misogyny'.
Rob Reiner, star of 1970s sitcom All In The Family; actress turned activist Mia Farrow; and British actress Jameela Jamil were among those to moan about the future of the firm under its new owner.
But Musk silenced them on Tuesday afternoon, posting: 'The extreme antibody reaction from those who fear free speech says it all.'
He continued: 'By ''free speech'', I simply mean that which matches the law.
'I am against censorship that goes far beyond the law.
'If people want less free speech, they will ask government to pass laws to that effect.
'Therefore, going beyond the law is contrary to the will of the people.'
He later added: 'Per aspera ad astra!'
The Latin phrase roughly translates as: 'Through difficulties to the stars!'
The deal is set to be completed in six months, with staff told their jobs are only guaranteed up to that point but 'no layoffs are planned' at the social media platform, which is highly influential among media circles despite having a smaller user base than Facebook.
Musk's purchase will see substantial changes, with the self-described 'free speech absolutist' expected to take a more permissive approach to moderation after a series of scandals including the platform's decision to bury a story about Hunter Biden's infamous laptop.
Musk has also suggested Twitter - which will now move off the New York Stock Exchange - could move towards a subscription-based model and a shift away from advertising which currently generates 90% of its overall revenue.
Musk is said to favor temporary 'timeouts' for users who break the new rules, rather than permanent bans such as those given to Donald Trump.
Other mooted changes include blue verification checkmarks for anyone who subscribes to Twitter's premium Blue service, which costs $2.99 a month.
Musk tweeted on Monday night: 'I hope that even my worst critics remain on Twitter, because that is what free speech means.'
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