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Twitter is now part of Elon Musk’s business empire. The $44 billion deal has made the platform’s former owners, its shareholders, richer as Mr. Musk paid a premium of $10 billion. It also made the company’s former bosses richer by a billion dollars, according to some estimates. But, what about its stakeholders?
Stakeholders are specific groups of individuals that rely on a company for particular needs. Employees join an organisation as they find their skills match a role in the company. They also resonate with the values it advocates. Clients, customers and users see a value in using its services. In return, stakeholders enable the company to create value and make money from it.
In 2019, a group of 181 CEOs released a statement as part of the Business Roundtable (BRT), chaired by JPMorgan’s Jamie Dimon, on the new purpose for organisations. It noted that not enough is being done for workers to adjust to the rapid pace of change in the economy, and that hard work is often not rewarded.
“If companies fail to recognize that the success of our system is dependent on inclusive long-term growth, many will raise legitimate questions about the role of large employers in our society,” it noted.
Keeping this in view, the group committed to delivering value to customers, investing in employees, supporting communities and generating long-term value for shareholders.
Even at that point, about three years ago, their commitment was viewed as a public relations stunt as there was no meaningful way to track its impact. Now, in this macro-economic environment, critiques of the BRT commitment are proved right.
A case in point is Twitter. The now-fired executives and the board clearly knew the direction in which Mr. Musk would take the company. In spite of that, Twitter’s former CEO Parag Agrawal and his top team did not negotiate a deal that would have benefitted their employees. Their failure to craft a deal for the company’s stakeholders, including employees, has to be seen in the light of their tenacity to make the world’s richest man sign a seller-friendly contract that would fatten the top executives and the shareholders.
“Allocating even 2% of the monetary gains that ultimately went to shareholders and corporate leaders to employee protection would have enabled providing a substantial monetary cushion to the about 50% of the tweeps who got the axe shortly after the deal’s closing,” according to a report based on a forthcoming essay by Harvard Law School noted.
If the top team had given the company’s stakeholders some thought during the deal-making process, its tweeps would not have been let go the way they were a week ago.