'Golden parachutes' for fired Twitter executives worth $122M, research firm says | Hacker News Reader

'Golden parachutes' for fired Twitter executives worth $122M, research firm says

reuters.com

47 pointspseudolus82 comments

If top executives in a public company are primarily judged on maximizing shareholder value these guys are some of the best of all time.

They successfully sold a multi-billion dollar tech company for a premium at the absolute height of the market, ending up getting shareholders something like 5x the market value as of the closing date.

I’m not a fan of golden parachutes and excessive executive compensation in general, but if there’s ever an exception these guys are it. They successfully transferred tens of billions of dollars in cash from the richest guy in the world into shareholders pockets.

"They successfully transferred tens of billions of dollars in cash from the richest guy in the world into shareholders pockets."

Was it done because of them or in spite of them?

They were also very likely big shareholders, potentially earning more from the deal then the parachute, so... Both?

That part is in the article too.

They went to court to ensure the deal went through after the buyer got cold feet too late. It definitely wasn't in spite of them.

I agree. Those guys played ol' Musky lake a fiddle.

No way at all. Musk played itself. Have you been paying any attention to this? They were pretty much forced to sell at the beginning.

They wanted to avoid the deal at first, then shareholders told them to continue in the deal and sell it to Musk. So they did exactly what shareholders wanted them to do.

Musk did not wanted to buy Twitter at all, he wanted to liquidate his stock without crashing stock price of Tesla. In the end Tesla crashed and he was forced to buy Twitter for absurd price.

I mean we’re all guessing here on motivation.

But I think he did want to buy it and realized pretty quick that he had overbid.

If he wanted to back out of the deal he wouldn’t have insisted on an absurdly airtight offer. It was ironclad, no way out. No lawyer would have allowed it unless the client insisted. If he had wanted a way to back out all he would have needed to do is set back and let his lawyers do what lawyers do when crafting the offer. Instead he insisted on an offer that will be taught in law school as the canonical ironclad offer. I can’t believe he though he’d be backing out when he made that offer. The man is unhinged but not a moron.

Musk wanted to sell Tesla shares after promising he will never do that. He needed an excuse that will not cause already overvalued tesla stock to crash.

He will need money because of a trail he is in.

He thought he could get away with cashing out tesla, paying fine and riding hype train of saving twitter.

Well that train hit the wall it seems. And he is stuck with twitter

As I said, he got into this by himself. No one played a ruse on him.

I mean yeah, this is a pretty big own-goal for Musk, but someone made damn sure that purchase contract heavily favored Twitter with no wiggle room for Musk, and you can bet it wasn't Musk's lawyers. At minimum the Twitter exec team had the foresight to know Musk wasn't reliable and lock him down.

It was probably an incompetent advisor on Musk's side, or maybe he had good advice but still pressed to do the thing in a rush and screwed everything up.

Twitter peeps didn't write and sign that contract :P

"someone made damn sure that purchase contract heavily favored Twitter with no wiggle room for Musk"

That is what you might expect to happen: Twitter wasn't looking for a buyer. You had a motivated buyer and an unmotivated seller so you would expect the contract to favor the seller or there would be no sale.

How does one, as a non executive, secure a bronze parachute? Maybe silver?

This is not a rhetorical question.

The way I do it: be you real self. Meaning: don’t care about what people think about you. Push the things you deem right for the business. Be brutally open to superior. Speak your mind. And then wait and see.

Either everybody loves what you’re doing. Then it’s a great company you’re fitting well in. Or…

How does this secure you a severance payment?

Unionize your workplace. I’m serious, this is the only realistic way for non-executive workers to get anything like this guaranteed in an employment contract. Severance is completely discretionary otherwise.

That will work in some cases, but in many you'll be expected to work for the duration.

My contract has a 3 month notice period, which is pretty standard in Europe for senior roles.

Ah that’s interesting to know about Europe, I should have specified the US context of what I said. That kind of arrangement is not common here, typically an involuntary termination will take effect immediately.

Being dismissed due to misconduct can be instant, e.g. if you were stealing or otherwise breaking the law. (Sometimes this goes to court, and the court can say the dismissal was unfair and grant the missing pay. Unions often help with this.)

Being made redundant has the paid period, and depending on the business it might require working, or it might not. If the factory just burned down, or (like in this Twitter case) management decided a whole team was completely pointless for the business, or if you do something with serious security measures, you'll probably not need to come to work, but if they're closing the factory on a known schedule you probably do.

There's usually a similar notice period when the employee resigns, although it's common for this period to be less. I think mine is 3 months either way, but in my previous job it was 1 month when I resigned, and 2 months if they dismissed me (but 0 for misconduct).

A lower bound of some of these rights is in EU/UK law, and many countries go beyond the minimum. These laws were passed through pressure from (mostly) unions.

Work in a European country where severance is based on years employed. When Nokia started downsizing in Finland, I heard of several old-timers (ICs, not senior execs) getting severance payments worth several years' salary.

This is somewhat standard in the US. I’ve worked for some companies I thought of as cheap or not so great but they both paid out some hefty severance packages based on years of experience. Some ex-coworkers got 24 months of severance based on the years of employment.

HN leads me to believe that SV companies don’t do severance and just fire you at a whim but I wouldn’t say it’s the norm.

The norm is 6-12 weeks in my experience. I have never heard of 104. I think that's unusual.

You don't have to be an executive. Anybody can get any kind of parachute they want... if they're valuable enough to the company and negotiate for it.

If a company wants you bad enough, they'll give you what you want... the trick is being that valuable.

So just be really, really good at what you do.. or at least have a great reputation in your field, and you may have the leverage to negotiate yourself a sweet deal from the company lucky enough to hire you.

But the parachute is when leaving. Why would the company not simply fire you and pay you the minimum severance package offered in your contract?

You must always negotiate the parachute when joining (or perhaps, when staying) - when leaving it is too late.

Stay bonuses [1] are probably the most common case. It's actually pretty common in a merger, especially one with a long period between announcement and integration, to hand out parachutes of various metals to key employees.

If you're the CEO closing a deal where the buying party is overpaying by $15B, they really really don't want you to quit in the middle.

If you're a rock star category manager, they still want you to stick around because you might get the job after in the combined entity, and even if you won't, who will they be able to hire to manage the category while they're doing the deal?

[1] https://www.forbes.com/sites/lizryan/2015/03/28/what-is-a-st...

So golden parachutes, in the commonly used C* sense, are subtly different -- they're buying an orderly transition.

And why would you need to buy an orderly transition?

Because the outgoing person is likely to have (a) massive organizational authority during the transition, (b) legal ways to abuse that authority to screw the company over, & (c) political power within the company.

The money is predicated on having a role with access to those three things, and it's a payment for not abusing them in a time when incentives not to abuse them are removed (because you're being fired).

Not very relevant when you're fired on the spot and escorted out of the building, as apparently happened at Twitter, but very relevant in a more traditional (and slow) leadership change. And hence why it's a standard part of contracts for those roles.

Surely this is just standard executive employment contract stuff?

i.e. Stuff like 12 months noticed period, stock options etc?

So if people wanted to object to it, they maybe should have done that before they got hired?

Yep. There is a cottage industry of exec TC package negotiation.

For high income engineers, I recommend they find a salary negotiation coach and an IP attorney.

I consulted with an excellent and professional entrepreneur behind thesalarynegotiator.com and found a software and patents IP atty in East Texas. Also, UpCounsel has excellent atty's.

Worth every penny. It's a tiny fraction of the smallest discount Elon was seeking. The fact they held the line and got full price for the shareholders is an epic win on which some of them will no doubt build brilliant careers in other places.

Sorry tech execs do not qualify as brilliant. A word reserved for minds that are truly doing step changes for humanity.

> ["Brilliant" is a] word reserved for minds that are truly doing step changes for humanity.

The British would like a word.

We can stop saying everything is brilliant once Americans stop overusing "awesome".

The plagues of Egypt were awesome. Nuclear weapons are awesome. Your breakfast was not awesome.

You haven't tried my cooking.

I can come over? You can cook while I tell you more about words you use wrong.

I looked up "awesome" in an online dictionary and was pointed to this three-part gem.

Alan Turing comes to mind. Don't know if the stories of his private life are embellished with Apocrypha.

One can safely assume you do not often converse with people in or from England.

I think Americans exaggerate the use of the word "awesome" similarly.

Guilty as charged.

More likely they'll build brilliant houses in sunny places

I wonder how their offer letter / contract looks like.

Section 3. Termination

Bla bla bla if you're fired for whatever reason, you'll get $30M.

If you are fired, all your options will vest immediately. Additional money payment at exec level too.

I think there might have been a clause about change of ownership as well

Usually it's that kind of clause (change in ownership). Basically all equity grants immediately vest, even the ones you got last week that would normally vest over 4 years.

It's a great deal.

Many are double trigger. (Change of ownership AND getting fired within X time as an example.)

You can find the details of executive severance plans in the SEC filings of public companies, they make for fascinating reading. Typically accelerated vesting of all equity, 12-ish months salary, extension of other benefits like health insurance. It’s also usually guaranteed in their employment contract if they’re terminated for any reason other than just cause (basically everything other than committing fraud or harassing employees).

Offer letters are public information for chief executives: Agrawal’s CEO offer letter: https://www.bamsec.com/filing/119312521342255/2?cik=1418091

An involuntary termination contract: https://www.bamsec.com/filing/156459018003046/2?cik=1418091

I liked what patio11 tweeted yesterday:

> And on the observed results, maybe I have to recalibrate how much of CEO compensation is option value for “You may someday find your own power and privilege threatened by something in the interests of shareholders and, if you do, fall on sword.”

https://twitter.com/patio11/status/1585846356328951808

Getting rid of these incompetent executives who couldn't grow one of the most valuable corporate properties in history will be worth billions to the company. These people literally decreased value, their parachutes being the last money they will extract from shareholders.

Parag used to be CTO and seems to have presided over multiple years of lethargic development and glacial product evolution.

What did Jack see in Parag as a leader, exactly? How do these people continue to fail upwards?

Peter principle I would imagine

Whatever combination of luck and intent there was, it ended up with a great result for Twitter’s shareholders.

So far. It's entirely possible that Musk ends up running Twitter into the ground.

It's private now, all current shareholders were bought out in cash.

So lotsofpulp makes a good point. The prior leadership may have done a crappy job, but if you're a shareholder, you likely got bought out at the peak of value.

No doubt they are happy.

So maybe Parag was a great hire?

Don't get why you're downvoted - your point is more than valid IMO. A shitty redesign, the DM panel lags massively on Android since a month or so, still no edit for the masses, no way to re-stitch threads, all some people got was a "hot take" label and the "circles" feature no one knows what it's for other than the ability to share lewds with just a selected bunch of followers.

So glad I’m not the only one whose DM panel is borderline nonfunctional. Mine randomly scrolls around to, hugely annoying.

I appreciate running things at scale requires a lot of effort but ffs the product couldn’t be simpler, and yet half the time it feels like someone’s weekend hackathon project.

As mentioned in another comment, these all sound like product issues, not technology issues. The only one which might cross into a CTO's responsibilities might be the DM lag, depending on the reason. Everything else seems to be almost entirely a product issue that'd be the responsibility of Keith Coleman, the VP of Product.

I guess it also depends on the shape of the org chart.

At the time Parag was CTO, did the VP of product report to him? If so, then you can absolutely make the claim that Parag is ultimately responsible here.

That's fair, I'm honestly not 100% sure what their org structure looks like and couldn't find it on a quick search.

If Parag was CTO at the time and the VP Product reports to the CTO, then it would ultimately fall on him.

The technology behind Twitter, aka how to distribute messages in real-time no matter if it's someone barely a dozen people follow or someone like Trxmp with hundreds of millions of followers, has been long solved. That is the secret sauce of Twitter (in addition to network effects).

Everything else is plainly a matter of presentation/product whatever you wanna call it. And Twitter has been going downhill there for a looooong fucking time.

> presided over multiple years of lethargic development and glacial product evolution

VP, Product is responsible for this not the CTO.

And given Parag's masterful display in forcing Musk to over-pay for Twitter it's obvious to me why he was chosen.

>And given Parag's masterful display in forcing Musk ...

Oh boy, here we go ...

That's not even remotely true.

Musk got into this trouble because of his immature antics (no source needed), then he was "over-paying" because the stock fell weeks after his offer without expectation (markets moved or whatever), finally the deal closed because Delaware courts don't fool around.

Parag was circumstantial to all of this, it could've been anyone, really, it could've been a rock with eyes and the outcome would've been the same.

Is this not part of the problem with evaluating senior management in general? Short of performing a drastic shakeup with drastic changes in fortunes as a result (i.e. Jobs returning to apple), you can always argue that the org would have got there anyway

> Parag was circumstantial to all of this

That's an interesting concept. The Twitter CEO not being at the centre of a takeover deal.

And in hindsight it all looks simple and clean but at many points it wasn't necessarily obvious that forcing Musk to acquire Twitter through legal means was going to pay off.

And had he not done it (or at least tried to force the sale), he'd have failed in his fiduciary duty to the shareholders and maybe they'd have sued or sacked him.

In his defense, I guess there wasn't much to do. The same can be said about pretty much any monopolistic corporation; the money will keep coming in regardless. It's better to sit back and do nothing than add complexity and risk compromising the monopoly position.

> The same can be said about pretty much any monopolistic corporation; the money will keep coming in regardless.

This cannot describe Twitter. For one, money was going out, not coming in:

https://www.macrotrends.net/stocks/charts/TWTR/twitter/net-i...

It used its monopoly on user attention to keep the investor money pouring in.

Parag used to be CTO and seems to have presided over multiple years of lethargic development and glacial product evolution.

A lack of fancy new features in the frontend UI doesn't mean very much about the development and product evolution as a whole. Contrary to popular belief, Twitter is not just the user frontend. There's a ton of other systems shuffling data around behind the scenes - advertising account management, adverts themselves, timeline 'AI' for inserting stuff into people's views, anti-spam, anti-fraud, site reliability, apps...

I imagine you'd need to be quite high up in Twitter to really get a sense of how quickly things are moving, and as outsiders you and I have absolutely no chance of getting any sort of insight from looking at the website.

Imagine if all employees got golden parachutes….

Musk is idiot. Just downgrade to basement janitor. Those golden parachutes clauses won't get triggered if they stay on or quit on their own. I've seen this played out even pay cut just to force someone out of ghe company with absolute humiliation. Then still procees to sue in multiple countries to ruin that persons financials. --- 28 years HR experiences in 7 difference industries and 4 countries.

You appear to have some fairly detailed revenge fantasies for Musk to exact against people he probably isn't that all personally affronted by.

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