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Out of interest, which shareholders ended up seeing Musk make good on the $54.20 purchase price, and did any of the regular employees get in on that deal? Was

Out of interest, which shareholders ended up seeing Musk make good on the $54.20 purchase price, and did any of the regular employees get in on that deal? Was anyone’s vesting schedule accelerated due to a full (or partial) clause being triggered by the buyout? If people were selling stock to Musk that they had just vested, I wonder what the tax situation looked like on stock with a market value of $20 (or whatever it was when the sale went through) but which you sold to the world’s biggest business clown for $54.20.

s1artibartfast 4y ago
All shareholders saw the cash, as did all employees with stock options and RSUs. This was an especially good deal for the employees because their equity would be worth a small fraction of that if Twitter followed other social media stocks. In reality, it would likely have done much worse, because it doesn't have the fundamentals of a company like FB. Future vests after purchase pay 54.20 cash instead of stock. It was a great windfall for everyone with stock or shares vesting. If not for the buyout, Twitter stock would probably be trading in the teens or single digits now.
jurassic 4y ago
Not sure what you're asking here. Anybody holding public shares (whether vested or purchased on the market) at the time the deal closed got $54.20, with the public share price converging on that price in the days/hours leading up to close (with a fluctuating discount due to the perceived risk of the deal not closing.) The market value was not $20 at the time of the close, that would be ridiculous. You might think the "true value" of the shares should have been closer to $20, but people knowing any shares they held would very likely be bought for $54.20 moved the market toward that price. This wasn't a situation anybody needed any kind of special hookups to "get in on" As for accelerated vesting: No. Outstanding employee grants converted to a cash vesting schedule. This effectively locked in the equity grants at $54.20, eliminating all upside and downside for employees. Elon moved aggressively to fire as many of these people as possible, in part because he probably felt they weren't worth that much money. This conversion to cash vesting changed nothing about the vesting timeline. The only people who were supposed to get a big pile of money after close were top execs (Parag, Ned, Vijaya, etc) with golden parachutes, but Elon tried to claim those people all deserved to be fired for cause in the first hours of his ownership in order to avoid paying the golden parachutes. I'm sure they'll fight it out in court and get their money eventually. Matt Levine wrote about this at length in Money Stuff.
- gorgoiler 4y ago
  Thank you for the informative answer. In terms of pricing, I’m getting confused between the low market price that we saw last summer ($40, not $20) at which public holders were bailing out versus the price at which the buyout closed. I also don’t really understand the mechanics of a buyout. If I own stock but I don’t want to sell, what happens then?
  - toast0 4y ago
    > If I own stock but I don’t want to sell, what happens then? Too bad, you can vote on the deal, but the deal happens based on the majority of votes. There are ways you can sue over the price, but it's procedurally difficult to have standing and institutional holders routinely mess it up; you may need to have the shares actually in your name in the books of the company, and must have voted against the corporate action, and it has to be the same shares. Anyway, if you have standing, you can protest that the price wasn't fair, but I can't imagine anyone arguing the price was too low with a straight face. Matt Levine covered some merger price lawsuits some years ago, IIRC Dell was one of the parties, it quickly gets into the ins and outs of Cede and Company and the Depository Trust Company and all sorts of intricate details. Of course, some corporate actions do provide options. A sale of a subsidiary may offer shareholders a share in the acquirer of the subsidiary or cash. In that case, you'd tell your broker what you wanted, and if your choice wasn't oversubscribed, you'd get it. If too many shares picked the option you picked, there's a (random) assignment procedure to handle that.

s1artibartfast 4y ago

All shareholders saw the cash, as did all employees with stock options and RSUs. This was an especially good deal for the employees because their equity would be worth a small fraction of that if Twitter followed other social media stocks. In reality, it would likely have done much worse, because it doesn't have the fundamentals of a company like FB. Future vests after purchase pay 54.20 cash instead of stock. It was a great windfall for everyone with stock or shares vesting. If not for the buyout, Twitter stock would probably be trading in the teens or single digits now.

jurassic 4y ago

Not sure what you're asking here. Anybody holding public shares (whether vested or purchased on the market) at the time the deal closed got $54.20, with the public share price converging on that price in the days/hours leading up to close (with a fluctuating discount due to the perceived risk of the deal not closing.) The market value was not $20 at the time of the close, that would be ridiculous. You might think the "true value" of the shares should have been closer to $20, but people knowing any shares they held would very likely be bought for $54.20 moved the market toward that price. This wasn't a situation anybody needed any kind of special hookups to "get in on" As for accelerated vesting: No. Outstanding employee grants converted to a cash vesting schedule. This effectively locked in the equity grants at $54.20, eliminating all upside and downside for employees. Elon moved aggressively to fire as many of these people as possible, in part because he probably felt they weren't worth that much money. This conversion to cash vesting changed nothing about the vesting timeline. The only people who were supposed to get a big pile of money after close were top execs (Parag, Ned, Vijaya, etc) with golden parachutes, but Elon tried to claim those people all deserved to be fired for cause in the first hours of his ownership in order to avoid paying the golden parachutes. I'm sure they'll fight it out in court and get their money eventually. Matt Levine wrote about this at length in Money Stuff.

gorgoiler 4y ago
Thank you for the informative answer. In terms of pricing, I’m getting confused between the low market price that we saw last summer ($40, not $20) at which public holders were bailing out versus the price at which the buyout closed. I also don’t really understand the mechanics of a buyout. If I own stock but I don’t want to sell, what happens then?
- toast0 4y ago
  > If I own stock but I don’t want to sell, what happens then? Too bad, you can vote on the deal, but the deal happens based on the majority of votes. There are ways you can sue over the price, but it's procedurally difficult to have standing and institutional holders routinely mess it up; you may need to have the shares actually in your name in the books of the company, and must have voted against the corporate action, and it has to be the same shares. Anyway, if you have standing, you can protest that the price wasn't fair, but I can't imagine anyone arguing the price was too low with a straight face. Matt Levine covered some merger price lawsuits some years ago, IIRC Dell was one of the parties, it quickly gets into the ins and outs of Cede and Company and the Depository Trust Company and all sorts of intricate details. Of course, some corporate actions do provide options. A sale of a subsidiary may offer shareholders a share in the acquirer of the subsidiary or cash. In that case, you'd tell your broker what you wanted, and if your choice wasn't oversubscribed, you'd get it. If too many shares picked the option you picked, there's a (random) assignment procedure to handle that.