Twitter’s top executives will be entitled to “golden parachute” payouts worth more than $120m if removed as expected by the company’s new owner, Elon Musk.
Musk reportedly immediately removed the chief executive, Parag Agrawal, finance boss Ned Segal, and Vijaya Gadde, the head of legal, policy and safety, after closing the $44bn takeover of the social network company.
The debt-funded deal has become a costly exercise even for Musk, the world’s richest man, thanks to the value of his stake in electric car manufacturer Tesla, with bankers, advisers and lawyers all racking up significant fees.
Legal costs in particular are likely to have run into the tens of millions of dollars after Musk tried to terminate the deal with Twitter in July, arguing that the company had misled him over the number of bot accounts on the social network. After months of legal wrangling Musk agreed this month to continue with the deal.
The relationship between Musk and Twitter’s executives started cordially when the billionaire bought a large stake in the company. Agrawal offered him a seat on the board but relations rapidly turned hostile after Musk publicly criticised the company.
Under the golden parachute clauses, Agrawal, Segal and Gadde will be entitled to $122m in compensation for previous share awards, a year’s salary plus some insurance payments.
Agrawal is likely to receive the largest payout, worth $57.4m, while Segal and Gedde are entitled to $44.5m and $20m respectively, according to company filings.
The three executives also hold a cumulative 1.2m shares, which are likely to be bought by Musk as is standard in any takeover. Those payments would be worth $8.4m to Agrawal, $22m to Segal and $34.8m to Gadde.
The belated closure of the acquisition will also trigger conditional payments to the investment banks initially hired by Twitter to negotiate the deal. JP Morgan Chase will receive $48m and Goldman Sachs $65m – on top of $5m and $15m already paid out.
Not every investment bank involved in the deal has proven to be a winner. The US banks Morgan Stanley and Bank of America Merrill Lynch, Britain’s Barclays and Japan’s MUFG collectively lent $13bn to Musk to fund the deal.
In normal circumstances the banks would offload the debt to other lenders to lock in their profits. However, the banks will instead hold the debts on their own balance sheets to avoid losses of up to $500m, the Wall Street Journal first reported. The banks will hope demand for the debt recovers once global bond market turmoil calms.
Musk has been forced to sell Tesla shares worth billions of dollars to fund the deal, although his net worth remained above $200bn before the deal was closed, according to Bloomberg.
Sarah Personette, Twitter’s chief customer officer, would be also be entitled to $11.2m in payments if fired. However, she tweeted on Thursday that she was “looking forward to the future” after a chat with Musk, suggesting she may stay on.