Last October, after putting Twitter Inc. ‘s stockholders and employees on hold while he considered whether or not to officially take the role of CEO, Jack Dorsey pledged to grant approximately 7 million of his own shares in the company without charging Twitter anything. Apparently, he is keen on keeping that promise.
The company dispatched a letter on Friday to its shareholders requesting their approval of its 2016 equity incentive plan. In the letter, which was written by its General Counsel and Secretary Vijaya Gadde, Twitter says its success has been due to its “highly talented employee base”.
Move Probably Prompted by Departure of Key Executives
Gadde added that the company’s future prospects depends on attracting and retaining “high-caliber people”. Dorsey is right on this employee compensation strategy, especially after the January exits of four executives.
Alex Roetter, the Senior Vice President of Engineering; Katie Jacobs Stanton, the Vice President of Global Media; Skip Schipper, the HR Vice President; and Kevin Weil, the VP of Product all resigned that month.
Their departure of the four executives came at a time when the company was battling frequent management upheavals, stock declines and rapid changes in its corporate strategy. The San Francisco-based company has also struggled with loss of its product appeal.
“Based on discussions with our stockholders, we have committed to amend the 2016 Plan after the Annual Meeting to prohibit the repricing of stock options, including through an option exchange program or cash buyout, without the consent of Twitter’s stockholders,” wrote Gadde.
It is worth noting that the fortunes of Twitter and its social media counterparts LinkedIn Corp and Facebook Inc are intertwined. Twitter saw its shares plunge to new lows after LinkedIn lowered its own forecasts. The same day, Linkedin shares tumbled at least 40% and also pushed Facebook and Twitter’s shares lower. However, Twitter’s two cousins appear to be doing well compared to it.
Compared to Facebook, Twitter has an edge in mobile. This means it should have had an head start when advertisers and users started moving away from desktop computers for smartphones. However, things didn’t turn as expected. Nowadays, Facebook boasts over 1.6bn active monthly users, while Twitter trails with a paltry 320m users. So what ails the latter?
Executive Turnover Denied Twitter the Benefit of Consistent Strategy
First of all, the rapid executive turnover has prevented the company from sticking to a consistent strategic plan. This has created a perception of a company in the midst of a turmoil, pushing advertisers away. Though most marketing executives view Twitter as a reliable way to reach out to their target consumers, the internal upheavals and executive changes have made them see it as immature unlike Google or Facebook. Hence, they put back their cheque books on the drawers.
Third, Twitter is a bit complicated for new users to use. This makes them reluctant to sign up for the service and stick around. While the company is considering how it can address this, it has to find ways to do so while making its regular users happy.
These problems prompted Dorsey to come back– just like Steve Jobs did with Apple– to help revive a company he created. One of the first things he vowed when he took up the CEO position in 2015 was to shake up its executive board.
Again, he kept the promise. On Tuesday, he replaced two white male board members whose terms have expired with two women. Martha Lane Fox, the founder of Lucky Voice (a British Karaoke company); and Debra Lee, the CEO of Black Entertainment Television, have joined the microblogging platform’s board. The two replaced Peter Chenin, a Hollywood executive and tech investor Peter Currie.
Other recent board appointees include Hugh Johnson, the CFO of Pepsi, who joined in April; and Omid Kordestani, the former chief business officer at Google, who took up the role of executive chair in late 2015.