Friday 28 October 2022

Elon Musk finalizes deal to buy Twitter, starts firing top execs including their lawyer Vijaya Gadde

Elon Musk owns Twitter now — and what happens next is anyone's guess

Dismissal of company's CEO, CFO among his first moves

 

Top 3 fired Twitter executives to receive separation payouts worth $122 million: Report

According to the report, Twitter CEO Parag Agrawal's 'golden parachute' was valued at $57.4m, while CFO Ned Segal's at $44.5m & Chief Legal Counsel Vijaya Gadde's was $20m.

Three top executives of Twitter Inc fired by new owner Elon Musk stand to receive separation payouts totaling some $122 million, research firm Equilar said on Friday.

 

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Elon Musk names himself CEO of Twitter and only member of company's board, too

Musk runs four other companies, including Tesla and SpaceX

Musk, who also runs rocket company SpaceX, brain-chip startup Neuralink and tunnelling firm the Boring Company, fired Twitter's previous chief Parag Agrawal and other top company officials last week, and has proposed revisions to the platform's user verification process, which has been free until now.

Responding to a tweet from author Stephen King that he would not be willing to pay $20 a month to keep the verified badge on Twitter, Musk replied: "How about $8?"

The billionaire said that introducing a price was the only way to defeat trolls and bots on the platform, and that Twitter could not entirely rely on advertisers to pay its bills.

Only member of company's board

Musk announced his Twitter CEO role in a securities filing. In another filing on Monday, Musk revealed that he became the sole director of Twitter as a result of the takeover.

Musk had previously changed his Twitter bio to "Chief Twit" in an allusion to his planned move. Twitter on Monday declined to comment on how long Musk might remain CEO or appoint someone else.

"The following persons, who were directors of Twitter prior to the effective time of the merger, are no longer directors of Twitter: Bret Taylor, Parag Agrawal, Omid Kordestani, David Rosenblatt, Martha Lane Fox, Patrick Pichette, Egon Durban, Fei-Fei Li and Mimi Alemayehou," Musk said in the filing.

Shortly afterward, Musk tweeted that the move to dissolve the board "is just temporary," without elaborating.

Replying to a tweeted question on what was "most messed up at Twitter," Musk tweeted on Sunday that "there seem to be 10 people 'managing' for every one person coding."

Jack Dorsey, who founded Twitter and was CEO before Agrawal, was pushed to step down from the top job at the company because investors believed he couldn't do the job while also being CEO of Block Inc., which runs the Square payment platform.

WATCH | Musk's Twitter takeover has many users threatening to leave:

Elon Musk’s Twitter takeover has some users considering leaving site

Duration 2:06
Some Twitter users say they’re worried Elon Musk’s plans to loosen moderation rules on the site will make it a hotbed of hate speech and abuse, and are considering leaving the social media platform before it goes sideways.

On Monday, Nick Caldwell, a general manager at Twitter's Core Technologies, indicated on his Twitter bio that he was no longer with the company. Caldwell and Twitter did not respond to Reuters's request for comment outside regular business hours.

Since the takeover, which concluded last week, Musk has moved quickly to put his stamp on Twitter, which he had ridiculed for months for being slow to introduce product changes or take down spam accounts.

His teams began meeting with some employees to investigate Twitter's software code and understand how aspects of the platform worked, according to two sources familiar with the matter.

Some staff who spoke with Reuters said they had received little communication from Musk or other leaders and were using news reports to piece together what was happening at the company.

Tesla's stock has lost a third of its value since Musk made an offer to buy Twitter in April, compared with a 12 per cent decline in the benchmark S&P 500 index in the same period.

With files from CBC News

 
 
 
 

Elon Musk finalizes deal to buy Twitter, starts firing top execs

Dismissal of company's CEO, CFO among his first moves

Elon Musk became Twitter's new owner on Thursday, firing top executives he had accused of misleading him and providing little clarity over how he plans to achieve the lofty ambitions he has outlined for the influential social media platform.

The CEO of electric car maker Tesla has said he wants to "defeat" spam bots on Twitter, make the algorithms that determine how content is presented to its users publicly available, and prevent the platform from becoming an echo chamber for hate and division, even as he limits censorship.

Yet Musk has not offered details on how he will achieve all this and who will run the company. He has said he plans to cut jobs, leaving Twitter's approximately 7,500 employees fretting about their future.

He also said on Thursday he did not buy Twitter to make more money but "to try to help humanity, whom I love."

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Musk terminated Twitter Chief Executive Parag Agrawal, Chief Financial Officer Ned Segal and legal affairs and policy chief Vijaya Gadde, according to people familiar with the matter. He had accused them of misleading him and Twitter investors over the number of fake accounts on the social media platform.

Agrawal and Segal were in Twitter's San Francisco headquarters when the deal closed and were escorted out, the sources said.

Twitter, Musk and the executives did not immediately respond to requests for comment.

Doubt over deal

The $44-billion acquisition is the culmination of a remarkable saga, full of twists and turns, that sowed doubt over whether Musk would complete the deal.

It began on April 4, when Musk disclosed a 9.2 per cent stake in the San Francisco company, making him its largest shareholder.

The world's richest person then agreed to join Twitter's board, only to balk at the last minute and offer to buy the company instead for $54.20 US per share, an offer that Twitter was unsure whether to interpret as another of Musk's cannabis jokes.

Musk's offer was real, and just one weekend later in April, the two sides reached a deal at the price he suggested. This happened without Musk carrying out any due diligence on the company's confidential information, as is customary in an acquisition.

Soon after the deal was reported as complete, Musk began firing top executives, including the social media company's CEO and CFO. (Dado Ruvic/Reuters)

In the weeks that followed, Musk had second thoughts.

He complained publicly that he believed Twitter's spam accounts were significantly higher than Twitter's estimate, published in regulatory filings, of less than five per cent of its monetizable daily active users. His lawyers then accused Twitter of not complying with his requests for information on the subject.

The acrimony resulted in Musk giving notice to Twitter on July 8 that he was terminating their deal on the grounds that Twitter misled him on the bots and did not co-operate with him.

Twitter sues

Four days later, Twitter sued Musk in Delaware, where the company is incorporated, to force him to complete the deal.

By then, shares of social media companies and the broader stock market had plunged over concerns that the U.S. Federal Reserve's interest rate hikes, as it seeks to fight inflation, will push the U.S. economy into recession.

Twitter accused Musk of buyer's remorse, arguing he wanted to get out of the deal because he thought he had overpaid.

Most legal analysts said Twitter had the strongest arguments and would likely prevail in court.

Their view did not change even after Twitter's former security chief Peiter Zatko stepped forward as a whistleblower in August to allege that the company failed to disclose weaknesses in its security and data privacy.

On Oct. 4, just as Musk was set to be deposed by Twitter's lawyers ahead of the start of their trial later in the month, he performed another u-turn and offered to complete the deal as promised.

The Delaware judge gave him an Oct. 28 deadline to close the transaction and avoid the trial.

'Chief Twit'

Since then, Musk has indulged the deal hype. He walked into Twitter's headquarters on Wednesday with a big grin and carrying a porcelain sink, subsequently tweeting "let that sink in." He changed his description in his Twitter profile to "Chief Twit."

He also tried to calm fears among employees that major layoffs are coming and assured advertisers that his past criticism of Twitter's content moderation rules would not harm its appeal.

"Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences!" Musk said in an open letter to advertisers on Thursday.

Musk has indicated he sees Twitter as a foundation for creating a "super app" that offers everything from money transfers to shopping and ride hailing.

Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences!
- Elon Musk in open letter to Twitter advertisers

"The long-term potential for Twitter in my view is an order of magnitude greater than its current value," Musk said on Tesla's call with analysts on Oct. 19.

But Twitter is struggling to engage its most active users who are vital to the business. These "heavy tweeters" account for less than 10 per cent of monthly overall users but generate 90 per cent of all tweets and half of global revenue.

Musk said in May he would reverse the ban on Donald Trump, who was removed after the attack on the U.S. Capitol, although the former U.S. president has said he won't return to the platform.

Trump has instead launched his own social media app, Truth Social.

Twitter shares ended trading on Thursday in New York up 0.3 per cent at $53.86 US, a small discount to the $54.20 per share deal price. The stock will be delisted from the New York Stock Exchange on Friday.

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