If Twitter's CEO Is Fired, He'll Get A Massive Stock Payout

Some investors are unhappy with the decline of Twitter’s stock price and the failure of the company to grow its monthly active users, and they are discussing whether Twitter would be better off without its CEO, Dick Costolo.

When CEOs at large US companies are fired they often have big severance packages in place. These “golden parachutes” give them big money if they’re kicked out at the whim of angry stockholders or a capricious board of directors.

Costolo has one too. It looks like Costolo’s package would be worth about $US37 million if he goes. We sent two messages to Twitter requesting comment but didn’t hear back.

According to Twitter’s most recent filing with SEC on this topic, Costolo gets only a tiny sum of cash if he is asked to leave: A lump sum of 100% of his base salary, which is only $US14,000.

But all his Twitter shares and options vest immediately, a package valued in total at around $US37 million when the disclosure was filed back in May 2014. The stock was worth just over $US31 at that time; it’s worth $US38 now, so the value of the package has changed likewise.

If he isn’t fired, Costolo must work at Twitter until 2016 to get all that stock, which vests in stages, the filing says.

That compensation comes on top of roughly $US310 million in stock (at today’s price) that Costolo has already been given for taking the company through its IPO. Again, because the value of $USTWTR changes over time, and because Costolo is selling his stock awards in chunks, that number will fluctuate.

But it’s still a pretty big number!

Disclosure: The author owns Twitter stock.

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