Twitter is trying to quell employees’ fears as Elon Musk’s looming takeover of the company fuels worries about a seismic overhaul of the social media service — but its assurances may only go so far.
For months, Musk’s $44 billion acquisition of Twitter has roiled the company’s 7,500 employees as the billionaire made pronouncements about how he would change the service and then tried to back out of the deal. Now, with his takeover back on track and set to close no later than next Friday, disquiet inside the company has intensified.
Employees’ fears were stoked Thursday when The Washington Post reported that Musk planned to cut Twitter’s staff by as much as 75% in the coming months, reducing its workforce to little over 2,000 people. Workers have also been worrying over how their compensation might change once Musk transforms the company from a publicly traded firm into a private one, said five employees who were not authorized to speak publicly.
Late Thursday, Twitter tried to calm some of the concerns. In a memo to employees after the report of job cuts, Sean Edgett, the general counsel, said there were no plans for layoffs.
“We do not have any confirmation of the buyer’s plans following close and recommend not following rumors or leaked documents but rather wait for facts from us and the buyer directly,” he wrote. The memo was reported earlier by Bloomberg.
Whatever Twitter does to reassure its employees may not be enough. Once Musk — a famously mercurial entrepreneur — completes the deal for the company, he can do almost anything he likes with the firm. And he has indicated that he plans to make big changes.
Musk has said that he wants more free speech on the platform and that he will allow former President Donald Trump, who was barred from the service, to return to tweeting. Musk, who has publicly criticized Twitter’s executives, has also said he plans to add more subscription services to Twitter and cut some jobs while attracting more users to the service.
As of Friday, the deal appeared to be hurtling toward the finish line. The investment banks that have committed $12.5 billion to finance Musk’s takeover of Twitter continue to work on finalizing those commitments ahead of the Oct. 28 deadline, said a person with knowledge of the situation. Musk’s advisers are also sharing their financial analysis of the company with investors, the person said.
Once the deal is closed, Musk is expected to run Twitter on a lean budget. The billionaire, who also oversees the electric automaker Tesla and the rocket company SpaceX, is taking out more than $12 billion in loans to finance the Twitter acquisition, which puts him on the hook for expensive repayments. Investors who are contributing more than $7 billion in equity to the purchase will also eventually expect returns.
Musk, who is paying $54.20 a share for Twitter, has made it clear that he thinks he is paying too much for the company as its stock has swooned in recent months. “Obviously, myself and other investors are overpaying for Twitter right now,” he said Wednesday during an earnings call for Tesla’s quarterly results.
A spokesman for Musk’s legal team declined to comment. Twitter declined to comment.
Inside Twitter, employees have been on a knife’s edge since Musk became the company’s largest shareholder this year. Concerns about his ownership have been compounded by the state of Twitter’s business, which has been inconsistent.
Early this year, Twitter considered cost-cutting measures, including not replacing employees who left because of attrition and small rounds of layoffs, two people with knowledge of the plans said. In recent months, Twitter has aggressively cut costs by freezing hiring for most jobs and reducing its real estate.
Workers are also concerned that Musk will not continue compensating them as planned, five employees said. Under the terms of the deal, Musk agreed to continue paying Twitter employees their comparable salaries and benefits for one year. But their equity compensation will change.
Twitter employees currently receive regular grants of shares in the company, which are earned over time based on their employment agreements. But, with Musk’s planning to take the company private and Twitter’s stock set to be delisted, these grants are to be replaced with cash. Shares that employees have already earned will be paid out at the price that Musk agreed to pay for Twitter.
Some employees said they were concerned that Musk might not honor that agreement given how he had repeatedly changed his mind on the deal. To address concerns, Twitter created an internal document to answer questions about how equity compensation might shift under Musk, three people with knowledge of the matter said.
On internal Slack channels, workers have tried to advise one another on how to manage their finances during the merger process, said three people familiar with the conversations. Some have been advised to download their equity contracts in case Musk attempts to delete or change the agreements, they said.
The uncertainty about pay has caused friction between Twitter’s employees and the company’s executives, three employees said. That’s because top executives are set to receive golden parachutes worth millions if Musk fires them.
Parag Agrawal, Twitter’s chief executive, is set to receive more than $60 million in cash and stock if Musk fires him. Other top executives stand to make more than $20 million. In response to employees’ questions about the executive payouts, Twitter’s management has said that such executive payments are routine in acquisitions.
Some Twitter employees said they hoped to at least be employed through Nov. 1, when many are scheduled to receive their next equity grant and tranche of stock or cash compensation.
Other employees responded to the prospect of layoffs with dark humor, joking about how few people would be left working at the company after Musk took control.
“Pumped for our 2023 all hands,” tweeted one Twitter employee, referring to a companywide meeting. He included a video of just four people dancing.