Twitter Exodus Continues Amid Buyout Battle with Elon Musk

Elon Musk's Twitter page displayed on the screen of a smartphone with Twitter logo in the background in Los Angeles on July 8, 2022. Chris Delmas/AFP via Getty Images

Twitter said it’s experiencing somewhat elevated levels of staff attrition amid the social media giant’s buyout battle with Elon Musk, who refused to agree to a golden handcuffs plan endorsed by Twitter management to retain talent.

“Tweeps,” as the company dubs its employees, have been quitting their jobs at a similar rate to industry peers but “slightly higher” than economic conditions warrant and that Twitter seems comfortable with.

“Our attrition is slightly higher than best practice for normal macroeconomic times, but remains inline with current industry trends. We will continue to monitor it to ensure that we can quickly identify any areas of concern and help mitigate where possible,” Twitter said in a July 13 regulatory filing (pdf) with the Securities and Exchange Commission (SEC).

Twitter management said in the filing that they had put together several employee retention schemes to keep key staff on board but that Musk had refused to give these plans the nod.

‘Is the Deal Now Officially Off?’

The filing featured an internal FAQ document for Twitter staff, with management explaining some of the circumstances around the company’s decision to sue Musk for trying to back out of an agreement he had signed, pledging to buy Twitter for $54.20 a share, or a 38 percent or so premium over current market price.

“What does Mr. Musk’s notice mean? Is the deal now officially off?” a presumed Twitter staffer asked, according to the memo.

“No. Mr Musk’s purported termination is invalid and wrongful,” Twitter management replied, adding that it is pursuing legal action to enforce the merger agreement with Musk.

Elon Musk attends The 2022 Met Gala Celebrating "In America: An Anthology of Fashion" at The Metropolitan Museum of Art in New York on May 2, 2022. Dimitrios Kambouris/Getty Images for The Met Museum/Vogue

A Twitter staffer then posed a question about the company’s plans to retain talent and why Twitter hadn’t “implemented retention packages or similar for Tweeps.”

Saying that “Tweeps are the heart of Twitter and will always be essential to our success,” management said that it had put together two employee retention program proposals and sent them to Musk in late June.

“Mr. Musk has not provided his consent to implement these programs,” Twitter said.

Twitter’s lawsuit elaborates on this further, with the July 12 complaint (pdf) indicating that Musk had expressed his concern to Twitter management about the company’s expenses and asked why it wasn’t cutting costs more aggressively.

“And, as noted, Musk has refused to approve—or even discuss—Twitter’s proposed retention programs for key employees,” Twitter said in the filing.

The details of Twitter’s proposed golden handcuffs staff retention plans are unclear.

‘Not a Great Situation’

Musk in April disclosed a stake in Twitter of 73.1 million shares, or 9.1 percent of the company, at one point making him the biggest shareholder in the company.

Shortly after Musk signed the buyout agreement, Twitter disclosed communications from Musk indicating his desire for cost-cutting at the company and concerns about growing headcount and expenses.

Musk has reinforced this stance in subsequent communications, most recently at an all-hands virtual meeting with Twitter staff in mid June.

“Right now costs exceed revenue. That’s not a great situation,” Musk said at the meeting, hinting that lay-offs, cost-cutting, or a restructuring might be in store.

Twitter made clear in the July 13 memo that it isn’t planning any company-wide layoffs but it left open the possibility of some targeted cuts.

“We’re not looking at company-wide layoffs. However, teams from across the company are reprioritizing and making changes to ensure we are operating responsibly and efficiently in the current operating environment,” Twitter management said.

“We may continue to see restructuring and org changes as we continue to align with our revised business needs (as we always have in the past).”

‘Unlock’ Twitter’s Potential?

During the all-hands meeting, Musk also insisted Twitter staff should work in-office for at least 40 hours a week or find work elsewhere, in contrast to Twitter’s pandemic pledge that employees could “work from home full-time forever.”

Musk did say he'd consider making an exception and potentially let staff whose work output is “exceptional” work remotely.

When Musk first announced the acquisition deal, he pledged to “unlock” Twitter’s potential by loosening restrictions on free speech on the platform and rooting out fake accounts.

One of his more attention-grabbing promises was to end former President Donald Trump’s ban from the platform and let him back on Twitter.

Trump said that even if his Twitter ban was overturned, he probably wouldn’t go back on the platform, preferring instead to stay on his own Truth Social.