Directors of Twitter are given $ 225,000 in limited shares, plus at least $ 50,000 in cash per year.
David Paul Morris / Bloomberg
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Elon Musk questioned the coordination of Twitter’s directors with shareholders over the weekend, citing most of the small personal shares on board the social media company. The entrepreneur and the richest man in the world offered to acquire Twitter in its entirety last week, to which the company’s board responded with protection from poison pills.
“Wow, with Jack’s departure, the Twitter board (ticker: TWTR) collectively owns almost no stock!” Musk tweeted on Saturday. “Objectively, their economic interests are simply not in line with the shareholders.
Some research shows that companies whose board members hold relatively more shares outperform those whose directors have less involvement in the business. This conclusion definitely makes objective sense: a greater financial incentive must mean more effort put in by a board member to make his company successful, assuming he is qualified and able to perform the role.
On the other hand, there are also independent votes on the board and directors who do not have a long history with a company. Call it a new perspective. They may be given shares when they join a company or, better yet, buy them with their own money.
Directors also receive significant compensation for being on board, usually with a combination of cash and shares and limited shares or RSUs. Their holdings should increase the longer they sit on board.
In the case of Twitter, directors are given $ 225,000 in limited shares plus at least $ 50,000 in cash per year.
Below is Twitter’s board of directors and each of their positions in the company, based on the company’s latest proxy statement or the financial statements of individual directors, whichever is more recent. Bets can include both ordinary shares and RSU.
Director Years on board Number of shares (thousands) Recent value (thousands)% OwnershipJack Dorsey1518,042.4 $ 847.9932.363% Omid Cordestani7934.2 $ 43.9070.122% Parag Agraval (CEO.16 $ 050%), 15 $ 050% Brett Taylor (chairman) 656.6 $ 2,6600.007% Martha Lane Fox632.5 $ 1,5280.004% Patrick Writes524.8 $ 1,1660.003% Robert Zoel421.5 $ 1.0110.003% Duban 10110.003% 0110020050100300102005001003005001005 Alemayehou Less than 17,000 less than 13,000 13
Source: company / director documents
As Musk pointed out, most of the ownership of the Twitter board is in the hands of co-founder Jack Dorsey – about 2.4% of the company – against about 2.6% owned by the entire board, including Dorsey.
Tesla (TSLA), which holds its annual meeting in the fall, last issued a power of attorney owned by board members in August 2021, based on their holdings in late June. Some directors have revealed transactions since then, including a wave of sales in December from Musk. Below are the shares of Tesla’s directors in the company when their RSUs are included.
Share Board Directory (Thousands) Recent Value (Thousands)% Owned by Musk (Chief Executive Officer) 18231,715.2 $ 231,251,77723.548% Larry Ellison415,228.548% IRA EHRENPREEIS15858.8 $ 857,0820.087% Kimbal Musk18797.0 $ 795 , 3960.0 $ 795.3960.081% \ t Robin Denholm (Chairman) 8726.7 $ 725.2060.074% James Murdoch5474.1 $ 473.1520.048% Kathleen Wilson-Thompson4206.0 $ 205.5600.021% Hiromichi Mizuno.267% 1610
Source: company / director documents
Not surprisingly, Musk dominates the table, with ordinary shares representing about 17% of the company and options that would bring his ownership to about 23.5% in the exercise. Oracle co-founder (ORCL) and early Tesla believer Larry Ellison is next with about 1.5%. The other six directors of Tesla own about 0.3% of the company combined.
In percentage terms, this is not so different from the Twitter dashboard. But it’s a much, much more valuable company – 0.01% of Tesla CEO Hiromichi Mizuno’s ownership of the company is worth more than $ 100 million, compared to Twitter CEO David Rosenblatt’s share of about $ 5 million. .
And Mizuno is the least invested in Tesla by the company. On Twitter, seven of the 11 directors have shares of less than 0.01% of the company.
Barron’s reviewed the board’s shares in several large high-tech technology companies, including Meta Platforms (FB), Apple (AAPL), Salesforce (CRM) and PayPal Holdings (PYPL).
In most cases, the founders held the vast majority of the shares among the directors, some early and long-term investors had fairly large stakes, and the newer, independent directors hardly registered in the capital table. Companies without founders on their boards may have very little ownership on the board – all PayPal directors combined hold less than 0.1% of the company’s stock.
This makes low property on the Twitter board the rule rather than the exception. Musk raised a fair point with his tweet, but one that is applicable to most major technology companies on the market, not just Twitter.
Write to Nicolas Jasinski at nicholas.jasinski@barrons.com
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