Twitter looks to stem 'punch in the gut' of worker exodus

Social network offers big bonuses to keep employees from jumping ship

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Credit: REUTERS/Dado Ruvic/Illustration

Facing a sinking stock price and some executive walkouts, Twitter is reportedly handing out six-figure bonuses and additional stock to keep some employees from leaving the company.

The social media company is working furiously to retain good employees, according to a Wednesday report in the Wall Street Journal. Citing unnamed sources, the report contends Twitter is sweetening compensation packages for top-tier employees down to junior players.

The cash bonuses reportedly range from $50,000 to $200,000 to entice them to stay for anywhere from six months to a year.

Asked about the report, a Twitter spokesperson said via email: "Developing, retaining, and recruiting top talent is critical to Twitter's business success and building shareholder value." She did not confirm or deny the Journal report.

Jack Dorsey, co-founder and a past CEO of Twitter, has been facing an uphill battle ever since he returned as CEO of the company last fall.

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Twitter CEO Jack Dorsey speaks during an earnings call broadcast through the company's Periscope service on Oct. 27, 2015.

While the micro-blogging service has become a top social network and has become a source of news and inspiration during political elections, national crisis and natural disasters, the company has yet to really harness that user base.

The issues are basic: Twitter isn't profitable, users are less engaged and its user base is showing slowed growth.

Just a few months ago, the company also lost four members of its leadership team. Product head Kevin Weil and head of engineering Alex Roetter both left, along with Twitter's head of media, Katie Jacobs Stanton, and Human Resources Vice Pesident Brian Schipper.

Dan Olds, an analyst with The Gabriel Consulting Group, said he's heard that Twitter employees are being poached at a higher rate than normal in Silicon Valley. If the compensation reports are true, Twitter hopes to make any employee exodus stop.

"If Twitter is at risk of losing key employees, that would be a real punch in the gut," said Jeff Kagan, an independent industry analyst. "Silicon Valley does not have an unlimited number of key workers. And every company wants them. The alarm must be sounding at Twitter."

Gartner analyst Brian Blau said he wouldn't be surprised if the compensation payments are happening.

"I do feel that Twitter is having problems," he added. "They have had serious trouble attracting, engaging and retaining users and those growth problems have not been resolved yet. If employees don't have confidence in the future of the company, then certainly Silicon Valley is a place where the talented ones won't have any trouble finding jobs at other interesting and dynamic technology companies."

A large part of the employee issue for Twitter is that it's not simply a matter of a stock hit. If the stock suffers, so do employees.

"Twitter stock has been under fire, losing around 60% of its value over the past year," said Olds. "Since Twitter has used restricted stock as a large part of their employee compensation, those employees have taken quite a hit to their net worth. In a Silicon Valley atmosphere where there are more jobs than talent, there's a good chance that many of their best employees will jump ship if they get a chance."

Olds said he believes Twitter employees receive average salaries for Silicon Valley, but make up for it, at least in theory, in company equity.

"If the stock goes down as much as Twitter's has, the employees are taking it in the shorts, compensation-wise," he said. "This isn't necessarily rats fleeing a sinking ship, it's more like rats looking to find a better ship. Twitter isn't going to go out of business anytime soon, but the steep drop in their stock signals that the market doesn't think they have the right business model yet and that Twitter's high-growth days might be behind them."

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