Twitter reassures employees vested shares will be paid out this month

After Elon Musk closed his $44 billion buyout Twitter Last week, employees at the company were set to cut jobs. Some told CNBC they were concerned they would lose equity compensation if Musk was sent packing before his shares were vested in the first week of November.

And Musk Tesla Employees have repeatedly sued over claims they were fired shortly before their shares vested and lost compensation.

However, it appears that the current tranche of stock-based compensation for many Twitter employees who were there before Musk took over will be paid after all.

According to company employees and internal communications seen by CNBC, the new vesting shares are expected to start on Nov. 4. Employees said managers assured them the company’s payroll department was working. While processing their reserved stock.

Tech companies are known for paying a high percentage of their compensation through stock awards, and Twitter relies heavily on equity payouts. In the first six months of 2022, Twitter recorded stock-based compensation expense of $459.5 million, compared with $289.1 million in the same period a year earlier. That’s close to 20 percent of Twitter’s revenue for the quarter.

Musk has hinted several times in recent months that Twitter is overstaffed and that one of his first moves would be dramatic cuts. He has already excluded top executives such as the CEO, CFO, policy chief and other high-ranking leaders and their direct reports. Musk reportedly fired them “for reason” to avoid paying millions of dollars in so-called golden parachutes.

It’s unclear whether Musk will compensate other executives and employees who were fired or resigned after buying the company for the shares that will vest. Twitter did not immediately respond to a request for comment.

Musk was scheduled to hold an all-hands meeting with Twitter employees on November 2. Employees told CNBC that the meeting was canceled unexpectedly.

The layoffs at Twitter will take place before Nov. 1, when many employees were scheduled to receive stock grants, The New York Times reported.

Musk responded, “This is false.” Tweet Friday, though he did not provide evidence or further details.

Twitter employees had some reason to be concerned about their equity, as the company is now in private hands and Musk has a history of trying to avoid payouts.

According to 2009 deposition transcripts from a high-profile Tesla lawsuit, Martin Eberhardt v. Elon Musk and others, including Gene Gladel, a former Tesla chief information officer, said Musk and other Tesla executives at the time “didn’t want to say it publicly. Tesla was cutting for financial reasons. Instead, they were trying to cut back on “performance and management responsibility.”

In a lawsuit since then, nearly 50 former Tesla employees have claimed the company fired them without paying them the equity compensation they were promised in job offer letters. The former Tesla employees won, but the electric vehicle maker was later able to overturn the decision on appeal.

Musk is the richest man on the planet, with most of his wealth coming from Tesla stock through Perforum and a historically large compensation package the company has granted him over the years.

Some disgruntled Tesla shareholders will take Musk and the Tesla board to court this month over his 2018 CEO compensation package. They allege that leaving most of the company’s stock to Musk was negligent and that the pay package failed to achieve Tesla’s stated goal of focusing on its business.

The case is being decided by Kathleen McCormick, the same judge who encouraged Musk and Twitter to settle their differences and complete the $44 billion deal they agreed to in April.

Guard: Twitter is now Elon Musk’s company