Elon Musk reveals plans for Twitter that includes pay cuts and monetization of Tweets to banks that backed up his purchase. According to three people familiar with the situation, Elon Musk promised banks that agreed to help fund his $44 billion acquisition of Twitter Inc that he could cut executive and board pay at the social media business in an effort to minimize expenses, and that he would discover new ways to monetize tweets.
According to the individuals, Musk made the pitch to lenders as he tried to arrange funding for the buyout days after submitting his bid to Twitter on April 14. His bank pledges, which he submitted on April 21, were crucial in Twitter’s board accepting his “best and last” bid.
Musk had to persuade the banks that Twitter’s cash flow was sufficient to service the loan he was seeking. In the end, he was able to acquire $13 billion in loans secured against Twitter, as well as a $12.5 billion margin loan secured against his Tesla equity. He promised to pay the balance of the payment with his own money.
According to the sources, Musk’s pitch to the banks consisted of his vision rather than firm commitments, and the exact cost reduction he will seek once he controls Twitter is unknown. According to the sources, the proposal he detailed to banks was lacking in depth.
Musk has tweeted about cutting the wages of Twitter’s board directors, which he claims will save the company $3 million. According to corporate documents, Twitter’s stock-based compensation for the 12 months ended December 31, 2021, was $630 million, up 33% from 2020.
Musk told the banks that he plans to build features to boost business revenue, including new ways to monetize tweets that contain significant information or go viral.