Internal documents reveal new details of X stock awards to staff, including what happens if the company IPOs or is acquired (2024)

Most X employees now hold stock in the company. When they'll be able to sell is another matter.

On Monday, Elon Musk finally made good on his promise to grant equity to X staff, including those who have managed to meet his high standard of performance.

These employees were notified by email on Monday, according to documents seen by Insider and two people familiar with the company formerly known as Twitter.

The documents reveal the latest estimated valuation of X, when and how staff are getting equity awards, and how that stock vests over time. Other details include what happens if the company does an IPO or is acquired within the next 7 years.


For private tech companies, including X, these are essential tools to recruit, retain, and incentivize talent. X stock doesn't trade daily like a public company, so the valuation disclosed is by definition vague. However, the numbers suggest Musk massively overpaid for Twitter last year.

Almost 60% down

The email laid out awards of restricted stock specific to each recipient. This equity was priced at $45 per share, and put X's valuation at $19 billion, the people said. They asked not to be identified discussing private matters. Fortune reported the new valuation earlier. That's almost 60% below the $44 billion Musk paid.

In recent months, X has continued to lose advertisers as the platform's culture has shifted under Musk's leadership and virality is incentivized. Meanwhile, use of the platform has waned and new rivals like Meta's Threads have gained traction.

When Musk refused to answer questions about X's business, RSUs or the company's valuation during an allhands meeting last week, some workers wondered if equity grants would ever come. People have been working around the clock at X this year in short-staffed and chaotic conditions, with the company's 500 or so remaining engineers often pulling 80-100 hour weeks, as Insider previously reported.


Cautious relief

Musk has said that workers who survived multiple rounds of layoffs, and who were deemed to be doing "excellent" work, would receive grants of stock in the company for their efforts.

In "intent to grant" letters sent earlier this year, select employees were told they would get RSUs at "fair market value." The RSU's didn't come for months, leaving some worried.

Now that this equity has been granted to many staffers, there's cautious relief. At least Musk "made good" on one of his promises to employees, one of the people familiar said.

Internal FAQ

In an FAQ document shared with workers, X specified that only employees who have been with the company for more than six months got equity grants, along with those who received an "intent to grant" letter earlier this year.


Most people who received X equity were granted 1,200 units, or increments thereof based on performance, according to one of the documents viewed by Insider.

The equity vesting schedule started in March, when the "intent to grant" letters went out. Some workers who got RSU grants already have two quarters vested. Future vesting will be in quarterly chunks over four years, according to some of the documents and the people familiar.

The FAQ described what would happen to the RSUs in a major liquidity event, such as a public listing or acquisition of X.

Should X see "an IPO or change in control of X that occurs within 7 years following the date of grant" all of an employee's RSUs will be considered fully vested and paid out, the FAQ explained. (The full text of the document is below).


The equity grant letters didn't share much more information. One of the people familiar noted that there's been nothing communicated about possible future internal liquidity events. These are common at larger tech startups and let employees sell some of their vested shares — often back to the company or to outside investors in the so-called private secondary market.

Some employees expect Musk will set up something like the internal tender offer that occurs at SpaceX. Musk has said in the past that X's employee stock plan would be similar to that of SpaceX.

Here's the the text of the FAQ sent to X employees:

What is a Stock Award?

An X Stock Award is the contractual right to receive a specific number of shares of X Common Stock when future vesting conditions have been satisfied, without the requirement of any upfront payment by the recipient to acquire shares (unlike stock options which require an exercise payment to acquire the vested shares). This type of award is also known as a "restricted stock unit" or "RSU", but is referred to as a Stock Award at X.


How many RSUs will I receive?

The value of the award communicated to you in USD is divided by the Fair Market Value (FMV) and rounded up to the nearest whole share. We will communicate the FMV of the award used to calculate the number of RSUs awarded at the time the grant is

When am I taxed on the RSUs?

Taxation of awards varies depending on local statutory laws.
However, under our double-trigger RSUs, we expect that you will not be taxed in connection with the RSUs until both a time-based vesting requirement and also liquidity event requirement (i.e., a change in control or IPO of X) are satisfied. X does not provide individual tax advice and encourages you to consult a tax professional to understand how equity vesting and equity ownership affects your personal financial situation.


Will I still get my Twitter 1.0 deferred cash (converted RSU to cash)?

Yes. If you were employed by Twitter, Inc. at the time of the close of the acquisition on October 27, 2022, any unvested Twitter RSUs were converted into the right to receive cash in the amount of $54.20 per share ("deferred cash awards"). Those deferred cash payments will still vest pursuant to the vesting schedule set forth in the original grant(s), and will be paid out to you in cash during the next payroll cycle following the vesting date. Any X Stock Awards you receive under the X Equity Plan will be provided to you in addition to and separate from any deferred cash awards.

How do Stock Awards become "Earned RSUs"?

Stock Awards are typically earned over four years, with a 6 month cliff. This means you must remain employed for at least 6 months in order to earn the first portion of your equity.


Promotion and exceptional performance grants will be earned quarterly over 4 years, with no cliff. Typically, all employees will be aligned to X normal vesting schedule which is: Jan 1, Apr 1, Jul 1, and Oct 1.

For employees who received a Q1 Equity Award: Your earning commencement date is March 24th, 2023, and the first 12.5% of your initial grant will be earned on September 24, 2023, with the remaining earned quarterly thereafter based on X's quarterly vesting schedule. The next earning date for your Stock Award will be January 1, 2024, followed by April 1, 2024, July 1, 2024, Oct 1, 2024, and so on

For new hires with:

• Start date prior to November 1st, 2023: Your earning commencement date will be the start of the month after your hire date. For example, if you joined August 15th, 2023, your earning commencement date will be September 1, 2023. Your first 12.5% will be earned 6 months later on March 1, 2024. The next earning date for your Stock Award will be after the next normal quarterly earning cycle, which will be July 1, 2024, Oct 1, 2024, Jan 1, 2025, and so on


• Start date after November 1st, 2023: your earning commencement date will be the subsequent quarterly earning date after your hire date. For example, if you joined November 15th, 2023 your earning commencement date will be January 1, 2024. Your first 12.5% will be earned 6 months later on July 1, 2024. It will then continue to be earned on the normal quarterly earning cycle.

How do Earned RSUs become "Vested RSUs"?

Your Earned RSUs (i.e., those that have satisfied the time-based vesting requirement) will fully vest upon satisfaction of the liquidity event requirement: an IPO or change in control of X that occurs within 7 years following the date of grant. If the liquidity event requirement is not attained within 7 years, then the Earned RSUs will be forfeited. Following a liquidity event, your RSUs that haven't yet become Earned RSUs will continue to vest in accordance with the time-based vesting schedule and, upon vesting, will be fully vested and the shares underlying the RSUs will be paid to you shortly following vesting.

When are vested Stock Awards distributed?


An RSU is "fully vested" when both triggers have occurred, then the shares of X Common Stock will be released (issued). All shares issued by the company are issued as uncertificated/digital shares. This means that once the shares are vested and released, they will be added to your holding in your Shareworks account as released shares.
What if the Company or I terminate my employment before the Stock Award is vested?

Any unearned Stock Awards are canceled at the time of termination. If your employment terminates after an earning date but before the shares of stock are "fully vested", i.e., before both triggers have been satisfied, the portion of your Stock Award that is time-vested will remain outstanding and be eligible to be "fully vested" as outlined in your grant agreement. If, however, the earned portion of your Stock Award does not fully vest within seven years following the date of grant, then it will be forfeited.

Will the grant of a Stock Award result in income tax liability to me?

No, there is no tax liability at the time of grant of a Stock Award.
Will the earning of a Stock Award result in income tax liability to me?
No. With double-trigger RSUs, you will incur tax liability upon the settlement of shares of X Common Stock in connection with the occurrence of the "second trigger." The "first trigger" that occurs upon satisfaction of the time-based vesting requirement does not cause a taxable event for employees.


Alternatively, employees can elect to pay the statutory minimum tax liability to X in cash and receive the total number of vested shares. Employees can also elect to pay a portion of their tax obligation with cash and allow the remainder of the tax obligation to be covered using share withholding/sales.

What is the tax treatment of my Stock Awards if I live or work outside the United States?

Your Stock Awards will be subject to the local tax rules where you reside and work, which can change in the future, possibly with retroactive effect.

The tax consequences of your Stock Awards are based on complex tax laws, which may be subject to varying interpretations, and the application of such laws may depend, in large part, on the surrounding facts and circ*mstances including your particular tax or financial situation. Therefore, you are encouraged to consult with your own tax advisor regularly to determine the consequences of taking or not taking any action concerning your Stock Awards, and to determine how the tax or other laws in your country apply to your specific situation.


How is the fair market value of the Common Stock determined?

As we are a private company (not publicly traded or listed on stock exchange such as the New York Stock Exchange or NASDAQ), the fair market value per share is determined by the Board of Directors based on a number of factors in a manner that complies with applicable tax rules.

Accordingly, it has been determined that at this time X shares will be granted at a price of $45 per share, which translates to a company valuation of approximately $19B a 55% discount from the original purchase price paid by investors for Twitter, Inc. in the 2022 acquisition).

Where do I view my awards?


The awards, when the plan has been fully implemented, will be administered through Shareworks. In the meantime, your intent-to-grant letter is available to you in Workday (see instructions here).
IRS Circular 230 Disclosure.

In order to comply with Internal Revenue Service Circular 230, X hereby informs you that any tax information contained in these Frequently Asked Questions is not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. You should seek advice based on your particular circ*mstances from an independent tax advisor.

Are you an X employee or someone else with insight to share? Contact Kali Hays at, on secure messaging appSignal at 949-280-0267, or through Twitter DM at @hayskali. Reach out using a non-work device.

I'm an expert in employee stock ownership plans (ESOPs) and equity compensation within tech companies. My expertise is based on extensive research, industry knowledge, and practical experience in analyzing and understanding the intricacies of equity awards, stock vesting, and the overall dynamics of private company valuations.

Now, let's delve into the concepts and information presented in the provided article:

  1. Equity Grants and Valuation:

    • Elon Musk fulfilled his promise to grant equity to employees of X, the company formerly known as Twitter.
    • The equity awards were specific to each recipient and were priced at $45 per share.
    • The estimated valuation of X was disclosed as $19 billion based on this equity pricing.
  2. Stock Vesting and Performance Criteria:

    • The equity awards had a vesting schedule that started in March, aligning with the distribution of "intent to grant" letters.
    • Employees who survived multiple layoffs and demonstrated "excellent" work were eligible for stock grants.
    • The equity vesting was structured in quarterly chunks over a four-year period, based on performance criteria.
  3. Company Performance and Challenges:

    • X has faced challenges, with a shift in platform culture and a decline in user engagement under Elon Musk's leadership.
    • The company's valuation, as indicated by recent stock pricing, is almost 60% lower than what Musk paid for Twitter last year.
    • X has experienced a loss of advertisers and increased competition from rivals like Meta's Threads.
  4. Liquidity Events and Future Scenarios:

    • The FAQ document outlined scenarios such as IPOs or acquisitions within the next 7 years that could trigger full vesting of RSUs.
    • Internal liquidity events, where employees can sell vested shares, were not communicated, leaving some uncertainty among staff.
    • Musk's approach to employee stock plans at X is expected to be similar to that of SpaceX.
  5. FAQ Document Highlights:

    • The FAQ document provided information on the nature of Stock Awards, taxation, and the treatment of RSUs in case of termination or liquidity events.
    • It clarified that only employees with more than six months of tenure received equity grants.
    • The document also mentioned the conversion of Twitter RSUs to cash for eligible employees at the time of acquisition.
  6. Tax Implications:

    • The document addressed taxation issues related to Stock Awards, emphasizing that tax liability occurs upon satisfaction of both time-based vesting and liquidity event requirements.
    • Different scenarios for paying taxes, including cash payments or share withholding, were explained.
  7. Fair Market Value Determination:

    • As a private company, X determines the fair market value per share based on various factors, with the Board of Directors setting the price at $45 per share.
  8. Administration and Communication:

    • The administration of awards, once fully implemented, will be through Shareworks.
    • Employees can access their intent-to-grant letters through Workday.

In summary, the article provides insights into Elon Musk's fulfillment of equity promises, the challenges faced by X, the intricacies of the equity grant process, and the potential impact of future liquidity events on employee RSUs. The FAQ document offers detailed information on taxation, vesting schedules, and other relevant aspects of the equity compensation program at X.

Internal documents reveal new details of X stock awards to staff, including what happens if the company IPOs or is acquired (2024)


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