If they are fired or Musk establishes his own management team, Twitter executives will be handsomely rewarded
But who owned Twitter before Musk? Who is Jack Dorsey and how much money can he and other executives make from the multi-billion dollar deal?
Here’s everything you need to know.
Who Invented Twitter?
In March 2006, Jack Dorsey, Noah Glass, Biz Stone and Evan Williams founded Twitter, which launched in July of the same year.
Dorsey, then a student at New York University, introduced the concept of an individual using an SMS service to interact with a small group.
The service’s original project codename was “twttr,” a divested variant of the word “Twitter,” inspired by image-hosting site Flickr and the five-digit length of American SMS shortcodes.
Another reason for the choice was that the domain twitter.com was already in use.
The company grew quickly; In 2007 it sent 400,000 tweets per quarter, but by 2008 the number of tweets per quarter had reached 100 million.
Twitter users were sending an average of 50 million tweets per day in February 2010, and just a few months later, June 2010 was sending about 65 million tweets per day, which translates to about 750 tweets being sent every second.
Although founding Twitter was a team effort, Jack Dorsey is often credited with planting the first seeds of the idea, and he served as the company’s CEO for two terms, between 2006-2008 and 2015-2021.
At 45, Dorsey has an estimated net worth of $600 million (£473 million).
Who owned Twitter before Elon Musk?
Twitter is a public company that trades on the New York Stock Exchange, which means it’s controlled by a number of different people.
Institutions, including private companies and mutual funds, own about 80% of the shares.
Morgan Stanley Investment Management – the investment arm of Morgan Stanley – the Vanguard Group and BlackRock Fund Advisors are the main institutional owners.
Jack Dorsey holds the most individual shares at 2.25%.
Who will run Musk-owned Twitter?
So who will call the shots on the ground?
Parag Agrawal currently runs Twitter and has praised the deal, saying he is “deeply proud” of Twitter’s achievements.
Agrawal, an Indian-American software developer, worked as a research intern at Microsoft Research and Yahoo! Research before joining Twitter in 2011.
Agrawal took over the position of CEO from Dorsey in November 2021 when Dorsey announced his retirement, to be replaced by Agrawal effective immediately.
Unlike his predecessor, Agrawal receives an annual salary of US$1 million (£790,000) as CEO, plus US$12.5 million (£9.9 million) in equity compensation.
But Musk stated in his bid memorandum to Twitter’s board that he had no “trust” in current management.
On Monday (April 25), Agrawal told employees the company’s future was uncertain but reassured employees there would be no layoffs.
“Once the deal is finalized, we don’t know which direction the platform will go,” he said, according to Reuters news agency.
How much money will Dorsey and Agrawal make from the sale?
Corresponding The Hollywood ReporterTwitter founder Dorsey is set to receive $978m (£771m) from the deal.
Dorsey has long refused to accept a salary from Twitter, opting instead for an annual allowance of at least $1.40 (£1.10).
However, he owns 2.4% of the company, or 18,042,428 shares, which Musk will buy for $54.20 (£42.74) each if the transaction closes.
Other Twitter executives can receive hefty rewards if they are fired or if Musk appoints his own management team.
According to Twitter’s latest proxy filing, Agrawal and Chief Financial Officer Ned Segal all have “change in control” clauses in their contracts.
Agrawal would receive a $38.7million (£30.5million) pay package if Musk resigned, while Segal would receive a $25.5million (£20.5million) deal would.
According to the Twitter proxy, they would also have to abide by “non-solicitation, non-discrimination and confidentiality terms.”
Meanwhile, Twitter CEO Bret Taylor will receive just over $3million (£2.4million) in cash, while former CEO Omid Kordestani will receive $50.6million (£39.9million) receives.
Do I make money from the sale?
Currently, Twitter is a public company, which means that some of NationalWorld’s readers may have invested in the company’s stock at some point.
But Musk plans to take the company private, meaning Twitter Inc would no longer be listed on stock exchanges and its shares could not be bought or sold publicly.
Musk said on Twitter that he would “try to retain as many shareholders as possible [a] Twitter privatized as permitted by law,” but what does it mean for you if you’ve already invested in the social media network’s stocks?
At some point in the sale process, Twitter will propose a “takeover bid” for at least 20 days.
Essentially a public offering for shareholders to sell their shares at a specific price — $54.20 per share in this example — the tender offer represents the company’s desire to purchase all of its outstanding shares.
The majority of investors then receive automatic payouts when the company is officially privatized, deposited into the account used to purchase the shares.
With the $54.20 takeover bid in the works, many investors may be tempted to buy shares now (while they’re still cheaper than that price) in hopes of making a quick profit.
Whether you should buy shares in a company that may be privatized depends on your risk tolerance and you should consider contacting a specialist who can help you assess the pros and cons.