Last week, Twitter’s new CEO Jack Dorsey had a big announcement for his employees in which he appropriately informed them via tweet. Dorsey decided that he would give a third of his stock options to all Twitter employees – that’s approximately one percent of the total issuance with a market value of $197 million.
This is an unprecedented act of generosity and I believe that this should serve as a valuable lesson for leaders. Why?
- Retaining the company’s most valuable asset
Intellectual property, exclusive customer contracts, unique service offering, differentiated market locations are all assets that companies value. However, each of them require employees in order to maintain, enhance and commercialize that value. Dorsey has realized that his workforce is Twitter’s most valuable asset, which is why he gave them the options grant as a retention incentive. An employee’s options grant is usually broken into percentage blocks, with each block vesting annually over a number of years. This is an effective long-term tool to keep his people happy.
- Boost the morale of employees
It gives his employees a performance target to help structure they’re daily activities. More importantly, it transforms the employees into company owners. Then employees feel more valued and also gives them a sense of all being apart of the Twitter team if they didn’t already feel it.
- Culturally focused team
Dorsey’s leadership also sets a strong tone of conduct across the whole organization. Employees won’t forget this surprising demonstration of generosity towards them. Now there is a Twitter DNA of teamwork, generosity and consideration.
- Telling investors that they matter
Shareholders matter, no matter if it is a start-up raising venture capital or a publicly traded company that is accountable to its investors. One of the amazing aspects of Dorsey’s gesture is that his block of options isn’t dilutive to its current shareholders. That means that Dorsey’s stake in the company was already publicly disclose so the amount of his options grant was already considered into the stock purchase decision of existing shareholders that already bought the stock.
Dorsey could have had the company issue a new block of six or seven million options for employees that would have been dilutive to shareholders, but instead he pulled from his own resources. That is a remarkable act of stewardship and leadership – the new visionary CEO. Do you think that other leaders and CEOs will catch on and follow suit?