Twitter is drafting broad job cuts days after Elon Musk takeover, sources say

Some staff say they are concerned lay-offs could come ahead of the vesting date for employee stock grants.

Twitter is drafting plans for broad layoffs, according to people familiar with the matter, days after the social-media platform was taken private by billionaire Elon Musk for $US44bn. Picture: Twitter

Twitter is drafting plans for broad lay-offs, according to people familiar with the matter, days after the social-media platform was taken private by billionaire Elon Musk for $US44bn ($A68.70bn).

The proposed lay-offs are expected to reduce engineering positions as well as affect other areas at the company, one of the people said. Twitter has roughly 7,500 employees, according to a disclosure earlier this year. The full scale of cuts being discussed couldn’t be determined.

Mr Musk moved quickly to make changes at Twitter since taking control Thursday. The same day, he fired Twitter chief executive Parag Agrawal and three other top executives. Mr Musk fired those executives “for cause,” and is saying he isn’t required to pay them multimillion-dollar severance packages that had been expected, according to two people familiar with the matter. Departed executives are weighing their options, one of the people said. Mr Agrawal didn’t respond to a request for comment.

Twitter’s top two executives were set to collect more than $US100m in severance packages, according to previously disclosed figures in securities filings, according to an estimate from Equilar, a compensation data and analysis company.

Earlier this year, Twitter said it was looking for ways to cut costs because of the macroeconomic environment, adding that it had significantly slowed hiring in the second quarter, according to a Securities and Exchange Commission filing in July. Social-media companies have grappled with market disruptions that have weighed on digital-ad spending this year, including soaring inflation, recession fears and the war in Ukraine.

Twitter has posted a loss in eight of its past 10 fiscal years, according to FactSet. The New York Times earlier reported about Twitter’s plans for job cuts and the severance issue.

Mr Musk told employees in June that he believed costs were “not a great situation” at Twitter, according to people who viewed a virtual meeting then. He didn’t rule out lay-offs, adding that anyone who is a significant contributor shouldn’t worry, according to the people.

Several employees have said they are worried that Mr Musk could move to cut jobs before November 1, which is a vesting date for Twitter’s compensation program. Employees’ grants were expected to be paid as cash after Mr Musk’s acquisition, according to people familiar with the issue. A number of employees have said they are concerned Mr Musk could try to avoid making those payments if their employment is terminated before November 1.

Before the deal closed, employees whose jobs were eliminated generally expected to receive cash for equity that would have vested within three months of leaving the company, plus the rest of their severance package, according to an internal memo reviewed by The Wall Street Journal.

As part of Mr Musk’s takeover, Twitter added $US13bn of debt, which analysts say will increase pressure to cut costs and boost revenue. Analysts estimate, based on terms previously laid out in documents related to the transaction, that Twitter will be on the hook for annual interest payments of more than $US1bn, compared with some $US51m in 2021. Twitter has posted average annual earnings before interest, taxes, depreciation and amortisation of about $US700m over the past five years.

Sarah E. Needleman contributed to this article.