How Twitter Inc’s CEO Plans To Lower The Employee Churn Rate

How Twitter Inc’s CEO Plans To Lower The Employee Churn Rate
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Twitter is seeking permission from investors to approve an equity incentive plan prior to its annual shareholder meeting this week. This move would allow CEO Jack Dorsey to give a third of his stock to employees in hopes of keeping them around.

Trying to lift Twitter employees’ morale

Twitter is asking shareholders to approve a plan that would let its co-founder and CEO give nearly 7 million of his shares to employees. Earlier this year, four main members of Twitter’s executive team, including the head of product and chief of engineering, exited the micro-blogging company.

Last week, Twitter’s General Counsel, Vijaya Gadde, stated in a letter to shareholders that Dorsey agreed in October to give nearly 7 million shares to employees without any cost or charge to the social network.

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“Mr. Dorsey and we believe our success is due to our highly talented employee base and that our future success depends on our ability to attract and retain high caliber people,” Gadde wrote.

When Dorsey first made his pledge in October, he tweeted that he would rather have a smaller part of something big than a bigger part of something small.

“I’m confident we can make Twitter big!” he said

Dorsey tweeted last fall that he would give exactly 1% of his shares to employees “to reinvest directly in our people.” His comment came after the micro-blogging site laid off 8% of its workforce, including engineers.

Happy employees will make Wall Street happy too

Such a move will probably boost the morale of the company and its employees at a time when it is not faring very well in the market. Since Dorsey resumed his position at the helm in October, he has had a rough go of things.

A number of key executives left the company earlier this year, and investors appear a little anxious about the future of the micro-blogging giant despite the relative success of its Periscope service. But Dorsey hopes that as long as employees are satisfied with the company, Wall Street will follow suit.

“We are asking our stockholders to approve the 2016 Plan at the Annual Meeting in order to allow us to fulfill Mr. Dorsey’s objectives of making his contributed shares available for grants to our employees,” Gadde wrote in the shareholder letter.

On Friday, Twitter shares closed up 1.94% at $14.43. Year to date, the stock is down by over 35%, while in the last year, it is down almost 61%. The stock has a 52-week high of $38.82 and a 52-week low of $13.90.

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