
Stockholder Proposal Regarding a Report on Users Owning the Twitter Platform - andruby
https://www.sec.gov/Archives/edgar/data/1418091/000119312517116229/d319969ddef14a.htm#toc319969_28
======
jbeales
This is a stockholder recommendation and the Board of Directors is
recommending [1] that stockholders vote against it, so it's likely dead in the
water. The headline "to discuss" is a probably overstating what will actually
happen.

A similar situation has happened the last couple of years with Apple, where
there's a shareholder proposal for greater diversity[2], and it gets clobbered
at the meeting.

[1]
[https://www.sec.gov/Archives/edgar/data/1418091/000119312517...](https://www.sec.gov/Archives/edgar/data/1418091/000119312517116229/d319969ddef14a.htm#toc319969_1)

[2][http://www.businessinsider.com/apple-diversity-
shareholder-p...](http://www.businessinsider.com/apple-diversity-shareholder-
proposal-2017-2)

------
Animats
The question is whether Twitter's board is going to try to ride it all the way
down to the bankruptcy. _Twitter loses money_. $167m last quarter. Twitter has
lost money for 10 years. Revenue is flat. They're not a growth company any
more. There's no sign of a turnaround.

This is when the board has to consider firing the CEO, and the stockholders
have to consider firing the board.

~~~
astrange
Someone working at Twitter told me they're losing money due to paying off
earlier employees' equity grants rather than cost of operation. Continuing to
run the company for growth will probably ruin it, since nobody has any good
ideas except continuing to turn it into Facebook.

(IMO this is the problem with starting your big company in SF - you'll just
get employees who leave your competitors and think the same way they do.)

~~~
ng12
That's ridiculous. California is at-will through and through. If paying a
subset of their employees was the biggest problem it'd be an easy one to
solve.

~~~
cestith
Paying an equity grant isn't the same as continuing to employ someone and
continuing to pay their salary. If someone has an equity grant, that's already
a liability to be paid. "At will" refers to ongoing employment, not paying
existing liabilities.

~~~
ng12
I'm not sure what you mean by "paying an equity grant". If you fire someone
they no longer receive new equity. And for a company that's been public for 4
years with a constantly dropping stock price I doubt the volume of early
employees exercising options could possibly bankrupt the company. I don't
understand how that could happen to any reasonably well managed company.

~~~
LeeHarveysGrave
>Even among its Silicon Valley peers, which have drawn closer scrutiny from
investors recently because of their generous stock-based compensation
practices, Twitter is notable for how much equity it doles out.

>And those grants of restricted stock units or options, which would have to be
covered to some degree by any buyer, simply add to the purchase price of any
deal.

>According to Twitter’s most recent annual filing, the company racked up $682
million in stock-based compensation last year. By comparison, the company’s
adjusted earnings before interest, taxes, depreciation and amortization —
which also excludes stock-based compensation — for the year was $557.8
million.

>Factoring in the payouts would have pushed Twitter well into the red for the
year.

[https://www.nytimes.com/2016/09/27/business/dealbook/twitter...](https://www.nytimes.com/2016/09/27/business/dealbook/twitters-
steep-premium-the-cost-of-employee-stock-grants.html)

------
MichaelGG
Maybe I'm slow but am I the only one not getting the point of this at all?
Users can already be owners by buying stock. And what exactly is the benefit?
Random Twitter users are somehow gonna come up with plans on how to make the
company profitable (heh how many "monthly fee" proposals will be submitted?)?

Are there examples of large companies converting into a credit union type
model?

Why would shareolders want this?

~~~
wbillingsley
Its worked quite well in a number of areas -- it tends to be good for
sustainable growth, rather than adventurism, as the owners are concerned more
about keeping the company sustainable and healthy than rapid growth. And the
feel-good factor of it being a community organisation means people like to
give it their custom.

John Lewis, one of the UK's largest retailers (annual turnover about £10bn)
with one of the best-respected brand is employee-owned under a cooperative
structure.

In terms of rescuing businesses from big egos doing badly, Portsmouth FC was
rescued by a fan take-over after a number of disastrous owners who'd saddled
the club with debt and left it on the verge of liquidation. It's now on a
healthier footing and starting the climb back up the leagues.

For Twitter, which was in a strong position to become a social utility, it's
probably not a bad model. But it doesn't involve going out in a blaze of
glory, so executives will hate it.

------
sailfast
For folks wondering about whether this will happen, I would highly recommend
also reading the Board's "Statement of Opposition." Pretty clear no.
Shareholder value, etc.

While this might be a decent option for a medium that could be considered
important for public discourse, it's certainly not going to goose your stock
price and I'm guessing even every Twitter user contributing a few bucks won't
get you to a sale price that might work for the board.

~~~
naravara
> I would highly recommend also reading the Board's "Statement of Opposition."
> Pretty clear no. Shareholder value, etc.

While I agree there is no shareholder value involved, I think there is some
scope for thinking of the platform as a public utility and putting it under
some framework other than a publicly traded corporation. It could operate
either as a Foundation, a Public-private partnership, a federal agency perhaps
as a subsidiary of the Library of Congress, or some other system of governance
that makes it operate more as a public trust than a corporation.

It's function is definitely more akin to a public utility than a product
produced for market, after all, so why not? I'd say most online stuff still
has too many returns to innovation to where the opportunity costs of
nationalizing them outweigh the benefits. But clearly Twitter isn't doing a
great job of staying afloat as it is.

~~~
M2Ys4U
>It could operate either as [...] a federal agency perhaps as a subsidiary of
the Library of Congress [...]

Because Twitter is a US-only thing, right? Don't forget about the enormous
_global_ user base who would definitely not be served by making it directly
controlled by the US government.

~~~
naravara
Are they any better served by it being incorporated in the US and managed by a
US based board of directors and mostly US based shareholders?

I suppose there might be some other sovereign wealth funds and investors from
China, Gulf States, UK, etc. in there too but still, hardly representative of
its actual user base.

I agree that that would probably be the worst option of the bunch, but it's
just an example of other ways a platform can be governed that's not a for-
profit corporation.

~~~
lallysingh
So far they're not _as_ deeply bound by US National Policy as they may be if
they're full-on nationalized.

------
wkoszek
It'd be much better of if each Twitter user would become a verified user and
pay $1/yr for normal plan with let's say notifications about posts/replies,
$6/yr for read/write access and $12/yr for some premium plan. Maybe that'd
make Twitter better off financially and better platform in general. Each time
I post something from my blog here I get natural organic comments etc.. Each
time I post on Twitter, I get some bots following me, retweeting and others.
I'd much rather pay and know there is real life there.

~~~
foxylad
I agree. I've always been non-plussed at Twitter's valuation, given the lack
of a clear monetization scheme, but then so many early unicorns were the same
- eyeballs were the primary goal, with vague assumptions that revenue will
automatically follow.

And I agree that if you had to pay (I'd go for a dollar a month) to tweet, it
would cure many of Twitter's ills. Bots, scams and fake news would pretty much
disappear overnight.

~~~
dmoy
The worry is probably that most of their userbase would also disappear
overnight...

------
EternalData
Douglas Rushkoff wrote decently well about this topic -- his argument was that
Twitter was a company that never should have gone public and which would have
been much more interesting had it been more decentralized and privately
controlled. Maybe not as interesting financially -- but interesting in the
sense of control and technological vision. Public markets can do all sorts of
strange things to a company -- I think as IPOs start to wane in frequency, a
lot of startups are going to take a long hard look at public markets and some
might decide to take a hard pass on them, despite the gold pot at the end of
the rainbow.

~~~
grogenaut
Had they not brought in a bunch of good engineers with the lure of IPO, they
would likely still be at the fail whale state.

------
bplatta
The board's statement of opposition pretty cleanly argues against this type of
equity overhaul.

That said, I do appreciate the spirit of the proposal. Specifically, how do
users that are contributing to the value of the network somehow extract some
of that value in real terms? Of course, there's a lot of complexity to that
sort of system and the cost of implementing it substantial. But whereas some
people are working on architecting that sort of system from the outset as more
a technical feat, this tact would get legal momentum that would almost
guarantee some sort solution, be it good, bad or more likely, somewhere in
between.

~~~
djrogers
> how do users that are contributing to the value of the network somehow
> extract some of that value in real terms?

If users aren't getting any value out of using the service, they won't use it.
The fact that they are using it, without any force or coercion, indicates
there is sufficient value being extracted from the service by it's users.

------
wffurr
I kind of want to buy some Twitter stock just so I can vote for this proposal.
Shame the board lacks vision beyond "maximize shareholder value". Yes yes,
fiduciary duty, etc. etc. There's more to life than the value of your stock.

~~~
mixedCase
> Yes yes, fiduciary duty, etc. etc. There's more to life than the value of
> your stock.

You don't see the contradiction in this statement?

------
grondilu
This reminds me of when people claim it'd be better if a company was owned by
its employees. This idea influences businesses to various degrees, from stock
options to cooperatives.

IMHO, this idea fails to acknowledge that ownership is a dynamic concept, not
a static one. In a free country, people can sell what they own. So even if you
give shares to a category of person you think should own them, you don't know
if they will keep them or if they will sell them to the very category of
people you took these shares from in the first place.

~~~
inimino
The idea that the difference between people with capital and without is one of
_preference_ seems rather bizarre.

~~~
swalsh
OP could have been a bit more subtle with his statement. Obviously some people
have an easier time than others accumulating capital. If you're working at a
minimum wage job (or 2) you may not have any "extra" capital to accumulate. In
those cases, it's not really a preference. On the other hand, many people DO
have some amount left over after their basic living expenses. People have
options with this. They have "preferences". They could spend it on a
"luxurious" lifestyle, expensive bars, updated wardrobes, expensive cars,
houses larger than they need. Etc. Many "rich" people (even middle class
people) have a preference for living below their means, and allowing the
capital to accumulate.

My father was a post office worker, the government took care of him for sure,
but he never made more than $20/hr. Today his retirement account has over a
million dollars in it. Growing up we never owned a car, we rarely eat out, and
we lived in a very cheap house, in a very cheap neighborhood.

I resented him for it many times, not having a car is very difficult in the
suburbs of the Midwest. Our cheap house was in a shitty school district.

But it was his "preference". He could have saved less, and spent the money on
a better house in a better school district. He chose to accumulate capital
instead.

~~~
inimino
Or he could have been born into money, used the family's capital wisely to
accumulate more capital while living in the best school district and leaving a
lot more than that for retirement.

Nothing wrong with that, but not everyone had the "preference" or "foresight"
to choose their parents so carefully.

What OP missed is not subtlety but a basic grasp of how the deck is stacked
for most human beings living today.

------
jerf
I feel like I'm missing some "between the lines" stuff, like, is this some
sort of velvet-gloved veiled takeover attempt? I'm not saying that's what this
is, but it seems like there's more than meets the eye here. Is there anybody
with _experience_ who might be able to comment on that? Either way it seems
related to the fact that this probably wouldn't be getting discussed if the
stock was doing well.

~~~
ath0
Shareholders are allowed to propose items that will appear on the ballot for
annual vote, "(1) In order to be eligible to submit a proposal, you must have
continuously held at least $2,000 in market value, or 1%, of the company's
securities entitled to be voted on the proposal at the meeting for at least
one year by the date you submit the proposal."
[https://www.law.cornell.edu/cfr/text/17/240.14a-8](https://www.law.cornell.edu/cfr/text/17/240.14a-8)

Before shareholders vote on the proposal, the board of directors can make a
recommendation - is this a good idea or a bad idea? In this case, they say:
bad idea.

Shareholders aren't bound to agree with the board, but usually do - after all,
they're the same folks who nominated the board in the first place.

~~~
jerf
So, "some person" of no particular power within Twitter (given how easy it is
to own $2K of Twitter stock for a year) got a ballot proposal on the ballot
for what could be read as more-or-less personal/ideological reasons as much as
a serious proposal? In which case, this sort of thing happens all the time and
this is only HN news because it's Twitter? (Checking my guess/understanding.
And I'm not upset that it's HN news or something, that's fine; just trying to
calibrate my understanding, as my initial calibration was perhaps too
oversensitive.)

~~~
JoshTriplett
> In which case, this sort of thing happens all the time and this is only HN
> news because it's Twitter?

Yes, this sort of thing happens all the time. If you own some shares of an
individual company (not through a fund), you'll get notice periodically of
items to be voted on: proposals from the board (often routine such as handling
accounting and audits), which the board recommends passing and which almost
always pass, and proposals from individual shareholders, which the board
almost always recommends against and which almost always fail. Many of them
are ideological, some more reasonable than others.

Does anyone know of any prominent case where a major company _passed_ a
shareholder proposal? And/or the board recommended in favor of one?

~~~
anigbrowl
I don't understand why American shareholders are so quiescent and trusting of
their boards. I can't help noticing that the people who idolize corporate
boards are often the same people who fulminate against representative
government.

~~~
Chaebixi
> I don't understand why American shareholders are so quiescent and trusting
> of their boards.

In this case, I don't think that's what's going on. Most of the shareholder
proposals I've seen are basically idiosyncratic political soapboxing, and I
vote my tiny number of shares against them because I don't agree with either
the proposal or the venue or just don't care.

If I ever saw one that seemed pertinent, I'd vote for it. However, the shares
I own outside of mutual funds are tiny and insignificant, so it's moot anyway.

------
alphonsegaston
I think the first social media network that succeeds in democratizing
ownership of the platform will spread like wildfire and overtake incumbents.

Everyone is already being primed for app-driven direct democracy through
social media channels, so the moment this is made real, it will explode in
popularity. The technical challenges for creating clones of existing services
are solved problems, so all it will take is the social will.

------
maverick_iceman
As a Twitter stockholder, how do I get to vote against this?

~~~
maxlybbert
In practice, it's a little convoluted (
[https://www.bloomberg.com/view/articles/2016-05-13/t-rowe-
pr...](https://www.bloomberg.com/view/articles/2016-05-13/t-rowe-price-voted-
for-the-dell-buyout-by-accident) , that story is about takeover bids, but I'm
sure the process is similar).

Occasionally, I get postcards asking me to nominate a proxy for some upcoming
shareholders meeting due to investments I own through my 401(k). I guess that
you should be on the lookout for that kind of postcard and follow the
instructions.

------
srisa
To go slightly off tangent, will it make sense for Twitter to enter into the
micro payments landscape? All (almost?) bloggers, people working on open
source projects have twitter account; even if they don't have one, creating
one is easy. Donors can get some kind of acknowledgement on their (and
receivers) twitter feed and the content creators will get some money.

------
bluetwo
Their examples of other organizations that are largely owned by their
employees skips the fact that these other organizations have great leadership,
who in turn foster commitment by spreading around the wealth.

Simply spreading around shares of the company won't make great leadership
magically appear at Twitter. That's backwards thinking.

------
PeterStuer
I'm not going one way or the other, but just want to remark that 'you can
already buy shares' isn't a correct response to a call for democratic
ownership. Typically in the latter you have the notion of one user/one vote,
while in the former model you get as many votes as you can buy.

------
riffic
haha. Twitter is not a public utility.

If you represent an organization and you need to control your social
infrastructure, you need to self-manage that infrastructure. Getting involved
in the development of GNU social or Mastodon would be a great start.

------
davesque
Regardless of how likely this would be to move forward, I have to say that I
can't imagine a user-owned Twitter being much of a good thing. I'm pretty sure
it would just devolve further into a platform for crap-flinging.

------
la_oveja
Is this actually happening? In legal terms, what does it mean?

~~~
ar0
No, it's not.

This is just a proxy statement, meaning it includes all proposals shareholders
will be asked to vote on at Twitter's next annual meeting (on May 22nd).
Everyone can submit shareholder proposals who owns at least 2000$ of stock
[1]. This does not mean that anything will actually happen: The board of
Twitter recommends voting AGAINST the proposal and I doubt large institutional
investors will vote against the board on this, so the measure will most likely
fail.

And even in the quite unlikely case the measure would be approved, it is only
asking for a "report" on what selling Twitter to its users would mean. It does
not argue for such a sale to actually take place.

[1]: [http://theshareholderactivist.com/shareholder-activism-
spotl...](http://theshareholderactivist.com/shareholder-activism-
spotlight/what-is-a-shareholder-proposal/)

~~~
TallGuyShort
And this is really just being considered from the perspective of what Twitter
being sold to users means for Twitter shareholders. What about what that means
for Twitter's users? Will using Twitter require having to purchase a share of
stock on a public exchange? I think it's a pretty bad idea all-around. Unless
they're incredibly smart about this (not even sure it's possible to figure
out), all of a sudden dilution of Twitter stock is linked with adoption, and
voting rights are linked with number of Twitter accounts, and having a Twitter
account is linked with ability to purchase stock which is not exactly an
anonymous, private thing.

~~~
SomeStupidPoint
Credit unions have a decent handle on customers-as-owners, so it's not
completely without precedent from a business standpoint.

My biggest issue is your last point, where owning an account would likely
involve "Know Your Customer" levels of identity proving. It would likely
require a new class of shares or going private, rather than buying a share on
an exchange. Similarly, you'd likely only get one share no matter the number
of accounts (using KYC information to de-dup, or having two notions a "member"
who can have multiple "personas").

I don't know that it's a good idea for Twitter, but it's at least a (sort of)
legally workable idea for an authenticated messaging platform in the abstract.

If I were starting a new Twitter, I'd consider it.

------
sctb
We've updated the title from “Twitter to discuss proposal to sell itself to
users”.

------
kylehotchkiss
Let's say a large percentage of people who don't exactly support the current
governments use of twitter buy up some twitter ownership. Can we then politely
ask him to communicate to American citizens via different mediums?

~~~
Sir_Cmpwn
Are you serious? This isn't necessary or relevant.

~~~
cwperkins
I think this is completely relevant. I think a company should be able to
moderate it's own content based on what it deems acceptable for it's
community. This is a totally valid question and something I believe is worth
discussing as we have gone well beyond absurdity at this point.

Edit: Disclosure, I am a twitter shareholder and approve the ban of
@realDonaldTrump from twitter unless the "libel" and McCarthy type posts are
removed and any accusations as such are filed in proper mediums.

~~~
cmurf
There is something to be said though about shining a spotlight on the
cockroach infestation, rather than filling the holes with spackle followed by
a nice paint job.

Threats of violence, or calls that encourage it are a fair line to draw for
any user. But the posts you're talking about removing, I think amounts to turd
polishing that might actually make it sparkle more than it deserves, and ends
up being a deception of the true character of the person.

Imagine if all the birtherism posts were scrubbed? That's his true nature.
Compulsive liar or delusional - doesn't really matter. My concern is assurance
posts are difficult to scrub. That's what incentivizes people to be sincere
rather than just taking inconsequential pot shots at others.

