Mr. Solomon received $25 million in total compensation last year, down from $35 million in 2021. His 2022 pay package consisted of a $2 million base salary, a cash bonus of $6.9 million and a $16.1 million stock award that is tied to how well the bank performs in the next few years, Goldman said in a regulatory filing.
Mr. Solomon’s 2022 compensation reflects the bank’s performance compared with 2021, Goldman said in the filing. Profit fell 48% last year, and revenue declined 20%, largely due to a slowdown in corporate deal-making that had previously fueled blockbuster earnings. Still, Goldman shares outperformed the KBW Nasdaq Bank Index and the broader S&P 500 last year.
In 2021, the bank’s shares were soaring and the bank was minting money in a merger boom that kept its high-price bankers busy.
Goldman doubled Mr. Solomon’s pay that year, an acknowledgment of the bank’s record profits and following a year when he was penalized for the firm’s involvement in the 1MDB corruption scandal. The bank also awarded Mr. Solomon a one-time stock award of about $30 million that year, citing “the rapidly increasing war for talent in the current environment.”
Late last year, Mr. Solomon engineered a restructuring of Goldman’s businesses meant to spotlight steadier businesses like asset and wealth management, taking some of the focus off its more volatile Wall Street operations.
He’s also paring back the bank’s consumer-facing Marcus operations and has admitted that Goldman’s attempts to do too much there contributed to missteps. The bank’s newly created Platform Solutions division, which houses credit cards and other pieces of the consumer business, lost about $2 billion on a pretax basis in 2022.
Mr. Solomon has moved to cut costs at Goldman. The bank laid off some 3,000 employees this month and slashed bonuses for many bankers by up to 40%.
Goldman’s compensation committee also considered the bank’s “continued progress in its strategic evolution as well as Mr. Solomon’s strong individual performance and effective leadership,” according to the filing.
Mr. Solomon’s pay fell more than his Wall Street counterparts.
Morgan Stanley
paid Chief Executive James Gorman $31.5 million for his work in 2022, a 10% pay cut from the year before.
JPMorgan Chase
& Co. awarded CEO Jamie Dimon $34.5 million in 2022 compensation, in line with a year earlier.
Wells Fargo
& Co. CEO Charles Scharf’s 2022 pay also stayed flat at $24.5 million in 2022.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com
Customers pulled funds from Crypto.com over the weekend after the company’s chief executive said the cryptocurrency exchange mishandled a roughly $400 million transaction.
Crypto.com Chief Executive
Kris Marszalek
said on Twitter that the transfer was sent to the wrong type of account on another exchange. The transfer of a large chunk of ether, a popular cryptocurrency, took place on Oct. 21, but came to light after Twitter users flagged the transfer as unusual, based on publicly available blockchain transaction records.
Concerns about Singapore-based Crypto.com spread across the internet over the weekend, with prominent digital-currency figures taking aim at the company. Cryptocurrency traders are on edge following the quick collapse of FTX, which went from one of the most trusted exchanges to bankrupt in the course of a week.
Changpeng Zhao,
chief executive at Crypto.com’s larger peer Binance, appeared to question the nature of the transfers without naming the company, which may have fueled Sunday’s withdrawals, according to crypto industry players. “If an exchange [has] to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems,” Mr. Zhao tweeted Sunday.
The value of Crypto.com’s own cryptocurrency sank roughly 20% Sunday from the prior 24 hours. It traded near 6 cents apiece.
Mr. Marszalek dismissed the concerns about Crypto.com, tweeting later on Sunday that the October transfers had “generated so much [fear, uncertainty and doubt] & speculation on Twitter” weeks later.
A spokesman for Crypto.com said that the platform was seeing higher levels of activity, noting that it had assets fully matching customer deposits. “Fluctuations in deposit and withdrawal activity does not affect our levels of service,” he added.
An outside analysis of Crypto.com’s public blockchain from Argus Inc., a blockchain analysis firm, showed that between 7 p.m. EST Saturday and 5:30 a.m. EST Sunday, users withdrew a net $14 million worth of the cryptocurrency ether and $39 million worth of other tokens tied to the Ethereum network from Crypto.com. Over that same time, Crypto.com moved $33 million from other wallets to meet customer demands, according to Argus.
It appeared that Crypto.com had enough funds to meet user withdrawals, said Owen Rapaport, co-founder of Argus.
Crypto.com is a midsize exchange. It has tried to raise its profile over the past year among retail investors. In late 2021, it sponsored the arena that is home to LeBron James and the Los Angeles Lakers, renaming it the Crypto.com Arena from the Staples Center. It also ran its first Super Bowl ad this year and is a global partner of Formula One.
The transaction that sparked concerns about Crypto.com involved the transfer of 320,000 ether—or roughly $400 million worth of the token at the time—to a wallet linked to crypto exchange Gate.io on Oct. 21.
Over the weekend, Mr. Marszalek said on Twitter that the transfer was supposed to be a “move to a new cold storage address,” but was sent to an external exchange address.
“We have since strengthened our process and systems to better manage these internal transfers,” he said on Twitter.
A cold storage address is a type of wallet that is unplugged from the internet. It is considered the safest way to prevent digital currencies from being stolen or hacked.
Mr. Marszalek said the company had worked with Gate.io to return the funds back to its cold storage.
“It’s not looking good for these guys in general,” tweeted Adam Cochran, founder of venture-capital firm Cinneamhain Ventures, which invests in blockchain-related companies.
After FTX’s troubles began last week, a number of cryptocurrency exchanges, including Crypto.com, promised to publish proof of their reserves in the spirit of transparency. The audited proofs allow users to check that their own assets are covered by an exchange’s reserves.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Elaine Yu at elaine.yu@wsj.com
Beleaguered cryptocurrency platform FTX filed for bankruptcy protection Friday, and Chief Executive
Sam Bankman-Fried
resigned.
FTX and a bevy of affiliates said they had more than 100,000 creditors and tens of billions of dollars in assets and liabilities. It is the largest crypto-related bankruptcy ever, and a demise remarkable for its swiftness as well as its size.
Just a week ago, FTX was an industry titan, and Mr. Bankman-Fried its smiling public face. In January, FTX raised money from Silicon Valley’s most sophisticated investors, at a valuation of $32 billion. A few weeks ago, Mr. Bankman-Fried was publicly musing about raising more, to get even bigger.
That is all gone. The bankruptcy will likely wipe out billions of equity value, leaving investors including Sequoia Capital and Thoma Bravo with stiff losses. It will maroon the crypto and cash deposits belonging to a legion of customers. FTX faces investigations or asset freezes from regulators and prosecutors around the world.
It has also rattled the crypto world. Crypto lender BlockFi, which had obtained a financial lifeline from FTX in July—one of several companies FTX had rescued earlier in the year—paused withdrawals Thursday evening.
Among the affiliates filing for bankruptcy protection is FTX US, a smaller unit that operated in the U.S. Most of FTX’s business was offshore. FTX and its affiliates filed in federal bankruptcy court in Delaware, where the U.S. unit is registered.
Thursday morning, Mr. Bankman-Fried said the troubles at FTX were confined to its international operations. He tweeted that FTX US “was not financially impacted” and that “every user could fully withdraw.” Later that day, FTX US said it might stop trading. On Friday, FTX US filed for bankruptcy along with the rest of FTX.
Bitcoin slipped after the announcement to trade near $16,500.
Newsletter Sign-up
WSJ Crypto
Smart and accessible crypto market analysis for investors.
At issue in the bankruptcy proceedings and the investigations is to determine what happened to the billions that FTX raised, that its customers deposited, and that it earned from operating what appeared—for a time—to be a successful cryptocurrency exchange.
FTX in 2021 also paid $250 million—a quarter of its revenue that year—to a “related party” for software royalties, according to documents viewed by The Wall Street Journal.
Mr. Bankman-Fried wrote on Twitter roughly an hour after the bankruptcy announcement that he was “shocked to see things unravel the way they did earlier this week.”
FTX’s troubles began last weekend, after rival exchange Binance said it would sell its holdings of an FTX equity-like token—spooked by a CoinDesk report showed the depth of the relationship between FTX and Alameda.
John J. Ray
III has been named the new CEO of FTX Group, the company said. The bankruptcy filing includes FTX Trading Ltd., the company presiding over the global trading website FTX.com, and Alameda Research, a trading firm founded by Mr. Bankman-Fried, in addition to FTX US.
Mr. Ray was chairman of Enron Corp.’s successor company, Enron Creditors Recovery Corp., and oversaw the energy-trading company’s liquidation after it filed for bankruptcy in late 2001. The recovery rate for Enron creditors as of 2008 was about 52 cents on the dollar, the company said at the time. Mr. Ray’s successes included securing a $1.7 billion settlement with
Citigroup
in 2008. He had accused the bank of helping Enron mislead investors.
Other noteworthy bankruptcy cases in which Mr. Ray served in similar roles include Nortel Networks Inc., Fruit of the Loom and
Overseas Shipholding Group Inc.
In the petition, Mr. Bankman-Fried said that
Stephen Neal
would be appointed as the chairman of the board of FTX Group if he is willing to serve. He also said that he is being advised by the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP.
FTX is the latest in a string of crypto companies seeking bankruptcy protection this year.
Photo:
Leon Neal/Getty Images
Bankruptcy means that it could be a long time before retail traders and others owed their funds are able to potentially recover any of them, if ever. Creditors to Mt. Gox, the Japanese crypto exchange that failed following a 2014 hack, are still waiting for their funds almost a decade later.
The collapse in digital-currency prices earlier this year triggered a rash of crypto-related bankruptcy filings, including Celsius Network LLC,
Voyager Digital Ltd.
and Three Arrows Capital.
Crypto investors may be confronted with an uphill battle to get their crypto deposits back in bankruptcy proceedings because their investments are likely to be treated as unsecured claims without collateral rights.
FTX’s bankruptcy also calls into question the fate of Voyager Digital. In September, the firm won the auction to buy the bankrupt lender’s assets with a purchase price of about $50 million, The Wall Street Journal has reported.
Voyager said Friday that the firm has reopened the bidding process for the company and is in active discussions with potential buyers. Voyager said it didn’t transfer any assets to FTX US, which previously submitted a $5 million good-faith deposit as part of the auction process. The funds are held in escrow, according to Voyager.
Voyager also recalled loans from Alameda Research for 6,500 bitcoin and 50,000 ether. The company currently has no loans outstanding with any borrower, it said. However, Voyager had about $3 million worth of cryptocurrencies stuck on FTX at the time of its bankruptcy filing.
—Jonathan Weil
contributed to this article.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Alexander Gladstone at alexander.gladstone@wsj.com
Corrections & Amplifications Sam Bankman-Fried said he is being advised by the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP. An earlier version of this article incorrectly said FTX was being advised by the law firm. (Corrected on Nov. 11)
Sam Bankman-Fried’s fall from grace has dealt an unprecedented blow to the crypto industry’s reputation — and some of this infamy may rub off on politicians who took his money, as well as on former regulators and Capitol Hill staffers who took well-paying jobs representing digital-asset companies before Congress.
Bankman-Fried, founder and CEO of the crumbling cryptocurrency exchange FTX, was one of the most generous donors to political causes during the 2022 election cycle, doling out $40 million, mostly to Democrats, with a particular focus on buoying crypto-friendly politicians in Democratic primaries.
FTX, like many other crypto firms, also aggressively recruited former federal regulators and Capitol Hill staffers, an often-criticized practice but one that has been common in the financial-services industry for decades.
Jeff Hauser, director of the left-leaning Revolving Door Project, said that Democratic politicians who worked closely with Bankman-Fried will have much to explain to the progressive wing of the party.
“A lot of people in the Democratic party got really close to Sam Bankman-Fried, and it reflects very badly on people who took this guy seriously,” he said. “People who in their past lives have taken on corporate power have been bedazzled by money seemingly being thrown their way.”
Bankman-Fried was the primary funder of the Protect Our Future PAC, which spent tens of millions of dollars in Democratic primaries this year. He also floated the idea of spending upwards of $1 billion in the 2024 presidential election to beat Donald Trump if he were the Republican nominee.
Promises of money on this scale likely tantalized many Democratic politicians, Hauser said, whether or not Bankman-Fried ever planned to go through with those contributions.
The crypto industry has also wielded influence by hiring former Capitol Hill staff and federal financial regulators to lobby and advise them on regulatory matters. The Campaign for Accountability, a nonpartisan anticorruption watchdog, published a report in February that found 240 examples of officials with key positions in the White House, Congress, federal regulatory agencies and national political campaigns moving into and out of the industry.
“The crypto industry is following the standard playbook for advancing special interests in Washington, including using all the levers of the influence industry,” Dennis Kelleher, president and CEO of the nonpartisan financial-reform organization Better Markets, told MarketWatch. “One of the most pernicious parts of that is the revolving door, where former officials essentially sell out their public service by using their access and influence on behalf of their private clients.”
Kelleher praised the performance of federal banking and securities regulators who have succeeded in keeping the carnage in the crypto markets segregated from the traditional financial system as popular tokens like bitcoin
BTCUSD,
-1.14%
and ether
ETHUSD,
-1.61%
lost more than 70% of their value over the past year.
Nevertheless, he believes crypto’s influence campaign has convinced lawmakers that what’s needed is to pass legislation that would tailor the financial-regulatory apparatus to be more friendly to the business models of digital-asset companies, rather than increasing funding for market regulators to enforce the regulations already on the books.
A bill put forward in June by Republican Sen. Cynthia Lummis of Wyoming and Democratic Sen. Kirsten Gillibrand of New York would do just that, granting regulatory authority for the most popular cryptocurrencies to the Commodity Futures Trading Commission, which critics of the bill say is more crypto-friendly than the Securities and Exchange Commission.
Another bipartisan bill from Senate Agriculture Committee Chairwoman Debbie Stabenow of Michigan, a Democrat, and Sen. John Bozeman of Arkansas, the committee’s ranking Republican, envisions a similar setup.
Kelleher said that these bills are the product of the crypto industry’s intense lobbying efforts, and without that push, lawmakers might see that what is needed is more funding to enforce securities laws that already exist.
“People need to realize that the crypto industry is basically lawless,” Kelleher said, adding that exchanges like FTX could have made the decision to register as a securities exchange with the SEC, whose supervision would have ensured that the company couldn’t engage in the type of activities that led to its downfall.
“The industry made the conscious decision to not comply with the law, to spend hundreds of millions of dollars on public officials to get a special law passed so they get special treatment,” he said.
Twitter users have complained a lot about Elon Musk’s early moves after taking control of the social network, but their complaints seem tiny compared with what Tesla Inc. investors have had to suffer.
As the U.S. focused on election returns Tuesday evening, Tesla
TSLA,
-7.17%
Chief Executive Musk tried to slip through disclosure of his long-awaited stock sales, revealing that he had sold nearly $4 billion of Tesla stock in the previous three trading sessions. Musk did not publicly address the stock sales nor his intentions to sell more within 24 hours of the disclosure, even while tweeting roughly 20 times in that period.
[MarketWatch asked him on Twitter to address the sales twice, and did not receive a reply; Tesla disbanded its media-relations department years ago.]
The sales fueled a further downturn in shares of the electric-vehicle maker on Wednesday, when the stock fell 7.2% to $177.59, its lowest closing price since November 2020. Tesla is currently down 49.6% on the year, which would be far and away the worst year yet for the stock — the previous record annual decline was 2016, when it fell 11%.
The problems for Tesla investors go far beyond Musk selling its stock so that he could overpay for a company with limited growth prospects and a host of other problems, but the poor optics certainly start there.
“He sold caviar to buy a $2 slice of pizza,” said Dan Ives, a Wedbush Securities analyst.
Ives was one of several on Wall Street to predict Musk would need to sell more shares to either close a gap in his financing of the $44 billion deal to buy the social-media company, or provide additional operating funds. In a telephone conversation Wednesday, he said the Twitter move is “a nightmare that just won’t end for Tesla investors.”
One reason it isn’t ending is that Musk’s need for cash in relation to Twitter is not done with the recent sales, portending more in the future. Musk said in a tweet late last week that Twitter had a “massive drop in revenue” due to activists pressuring advertisers to pull their ads, and he will have to continue paying the employees he did not lay off while servicing a debt load that analysts have estimated will cost him $1 billion a year, much more than Twitter has cleared in profit in the past two years. Twitter reported a net loss of $221 million in 2021, and a net loss of $1.13 billion for 2020.
Read more about Elon Musk potentially pumping Tesla stock ahead of a sale
“The first two weeks of ownership have been a ‘Friday the 13th‘ horror show,” Ives said, adding that the verification plan and mass layoffs of 50% of employees — and then trying to rehire some of the engineers, developers and cybersecurity experts — was “really stupid.” And, according to CNBC, Musk has also pulled more than 50 Tesla engineers, many from the Autopilot team, to work at Twitter.
“But it’s consistent with how this thing has been handled,” Ives said, adding that Musk is “way over his skis” with the Twitter acquisition.
Amid all the chaos of his first two weeks running Twitter, how much time has Musk had to run his other companies? Musk was already splitting his Tesla time with SpaceX, The Boring Company, Neuralink and many other endeavors, and now he has taken on the gargantuan task of turning a social-media company that has never been highly profitable, nor valuable, into something worth the $44 billion he paid.
The effort, Ives said, has “tarnished his brand,” which in turn has a big risk of hurting Tesla. Many investors have bought into the Tesla story because they believe Musk is a genius and they back his vision of electrifying the automotive industry. Twitter does not meld into that vision, except as a platform to spout his opinions, vitriol and promote more wacky concepts.
Since Musk began his quest to buy the company, he has endured more criticism than ever before, with even some fans starting to throw shade or question his decisions. Investor Gary Black, managing partner of the Future Fund LLC, for example, pointed out that Tesla’s top engineers should not be running Twitter, where the news was getting worse.
Tesla is not a company that can just run itself at this point. Musk has claimed he did not want to be chief executive but that there was no one else to take over the car company, which is why he has served as CEO for years. It’s not clear, though, how much effort he actually has made at trying to recruit someone. Now, as Tesla faces its usual multitude of issues, he is off spending his time trying to turn Twitter into a payments company, or maybe a subscription company, or maybe an “everything app,” or whatever he comes up with tomorrow.
“Musk needs to look in the mirror and end this constant merry-go-round of Twitter overhang on the Tesla story, with his focus back on the golden child Tesla, which needs his time more than ever given the soft macro, production/delivery issues in China, and EV competition increasing from all corners of the globe,” Ives wrote in a note Wednesday, in which he reiterated an outperform rating on Tesla stock.
For Twitter to reach anywhere close to the valuation Musk paid for it, it’s going to need a ton of attention from a focused leader, but how can Musk be that leader and give Tesla the attention it deserves? The answer is he cannot, and is very likely to give the attention that Tesla needs to Twitter instead after committing $44 billion (not all of it his) to that endeavor. Tesla investors will be left staring at the sea of red that this year has wrought, and wondering if its leader is about to sell more shares to fund his other effort.
Platforms Inc. will begin laying off employees on Wednesday morning, Chief Executive
Mark Zuckerberg
told hundreds of executives on Tuesday.
The coming cuts are expected to total many thousands of employees and will likely be the largest of the year to date in the tech sector, The Wall Street Journal previously reported.
Mr. Zuckerberg appeared downcast in Tuesday’s meeting and said he was accountable for the company’s missteps, and that his over-optimism about growth had led to overstaffing, according to people familiar with the meeting.
Meta’s head of human resources,
Lori Goler,
told the group that employees who lose their jobs will be provided with at least four months of salary as severance, according to people familiar with the meeting.
Mr. Zuckerberg described broad cuts and specifically mentioned the recruiting and business teams as among those facing layoffs. A general internal announcement of the company’s layoff plans is expected around 6 a.m. Eastern time on Wednesday, with the specific employees losing their jobs informed over the course of the morning.
Following the meeting, company directors in numerous sections of the organization began notifying their subordinates of cuts and reorganizations.
Inside Meta, employees have been seeking specifics about the coming layoffs for days and planning for the worst by forming external groups with current colleagues and discussing how to use benefits.
Meta reported more than 87,000 employees at the end of September. Company officials already told employees to cancel nonessential travel beginning this week, the Journal previously reported.
The planned layoffs would be the first broad head-count reductions to occur in the company’s 18-year history.
Newsletter Sign-up
Technology
A weekly digest of tech reviews, headlines, columns and your questions answered by WSJ’s Personal Tech gurus.
Meta’s stock has fallen more than 70% this year. The company has highlighted deteriorating macroeconomic trends, but investors have also been spooked by its spending and threats to the company’s core social-media business. Growth for that business in many markets has stalled amid stiff competition from TikTok, and
Apple Inc.’s
AAPL 0.42%
requirement that users opt in to the tracking of their devices has curtailed the ability of social-media platforms to target ads.
After hiring aggressively through the pandemic, the tech industry is facing its biggest retrenchment in years. Twitter Inc. is laying off thousands of employees under new owner
Elon Musk,
as he tries to restructure the company to match his vision while facing widespread concern from advertisers about its new direction.
Snap Inc.
SNAP 2.70%
said in August it would cut roughly 20% of staff, or more than 1,000 employees, to prepare for what it said would be an expected period of low sales growth lasting into 2023.
—Salvador Rodriguez contributed to this article.
Write to Jeff Horwitz at Jeff.Horwitz@wsj.com and Sam Schechner at sam.schechner@wsj.com
is leaving the department-store chain early next month to join
Levi Strauss
LEVI -2.12%
& Co. with plans to have her take over as the jeans maker’s CEO.
At Kohl’s, Ms. Gass has been under attack from activist investors for sales declines and a steep drop in the company’s stock price. In September, activist investor Ancora Holdings Inc., urged the company to replace Ms. Gass and its chairman. Kohl’s shares, down nearly 40% on the year, jumped 8% in early Tuesday trading.
Ms. Gass will leave Kohl’s Dec. 2 and join Levi Jan. 2, where she will serve as president with oversight of Levi’s brand and global digital and commercial operations. The 54-year-old will succeed Levi’s CEO
Chip Bergh
within 18 months, the company said. Mr. Bergh, who is 65 years old, has run Levi Strauss since 2011.
Kohl’s appointed
Tom Kingsbury
to serve as interim CEO until a permanent successor is named. Mr. Kingsbury is a former
Burlington Stores Inc.
CEO who joined Kohl’s board in 2021 as part of a settlement with activists. In a statement, Ancora said it was the right time to find new leadership and it was pleased that Mr. Kingsbury was the interim CEO.
Kohl’s also released preliminary results for the quarter ended Oct. 29. The company said that same-store sales decreased 6.9% compared with a year earlier. Net sales fell 7.2%. The company earned 82 cents a share compared with $1.65 a share.
It plans to report full results on Nov. 17.
Kohl’s, with roughly 1,100 stores, has struggled to attract shoppers amid rising competition from discounters, fast-fashion chains and online competitors. Earlier this year, Kohl’s scrapped plans to sell itself to the owner of Vitamin Shoppe—in a debt-funded deal initially worth $8 billion but later reduced. The company’s market capitalization has fallen to around $3 billion.
Ms. Gass wasn’t schooled in the art of selling clothes. She studied chemical engineering at Worcester Polytechnic Institute and received a master’s in business administration from the University of Washington. She then spent six years honing her marketing skills at
Procter & Gamble Co.
before joining
Starbucks Corp.
in 1996.
When she departed the coffee chain after nearly 17 years, founder
Howard Schultz
credited her with helping develop such products as the Frappuccino.
Ms. Gass joined Kohl’s in 2013 as chief customer officer with responsibility for marketing and the e-commerce business. In 2015, her role expanded to chief merchandising officer, and in 2018 she took over as CEO and joined the board.
Ms. Gass had some early success at the helm of Kohl’s, telling her team that they needed to think differently and shouldn’t be afraid to try new ideas. She formed a partnership with
Amazon.com Inc.
that allowed shoppers to use Kohl’s stores to return goods bought at the online retailer. Last year, she wooed Sephora away from JCPenney, where it had operated shops for more than a decade.
She overhauled the merchandise, dropping poorly performing brands such as Dana Buchman, and bringing in new ones, including Tommy Hilfiger, Eddie Bauer and Cole Haan. She expanded the selection of activewear from brands such as
Nike Inc.,
Adidas AG and
Under Armour Inc.
Ms. Gass also simplified discounts and pricing and is refurbishing stores. The company is on track to repurchase $1.3 billion in stock in the current fiscal year.
Yet, the moves haven’t improved Kohl’s business enough to satisfy some shareholders. While sales initially increased, they had started to decline even before the pandemic forced retailers to temporarily shut stores and kept consumers homebound. The company has faced two years with activist investors calling for board changes.
—Dean Seal and Lauren Thomas contributed to this article.
first week at Twitter Inc., he flouted much of the advice management gurus have dished out for decades.
The billionaire’s swift actions stand in contrast to those of many new leaders, who often use the first 90 days to meet with employees, listen to concerns and assess how to improve a company’s products before embarking on strategy shifts, executives and corporate advisers say.
“At a minimum, this is an untraditional approach,” said
Joel Peterson,
the former chairman of
JetBlue Airways Corp.
, who has served on dozens of corporate boards and advised chief executives across industries. “It’s iconoclastic, it’s unusual, it’s not what everybody would do—but I don’t really fault him for it.”
Sweeping layoffs at Twitter have eliminated roughly half of the company’s workforce.
Photo:
Leonardo Munoz/VIEWPress/Getty Images
Mr. Musk—who once described himself to The Wall Street Journal as a “nano manager” steeped in the smallest details—appears to be employing many of the management tactics he deployed in building his other companies,
Tesla Inc.
and Space Exploration Technologies Corp., executives and advisers say. Those include a hands-on obsession over product decisions, a distaste for corporate structures and a focus on speed. Tesla is now the world’s most-valuable car company, and SpaceX is the world’s busiest rocket-launch operation.
Newsletter Sign-up
Alert
Technology
Major news in the technology sector.
Management specialists have long said that the first few months of an executive’s tenure are critical, a time when corporate chiefs can plot their agenda and begin to reset a corporate culture. Well-known books on the subject, such as “You’re in Charge—Now What?” say that new leaders should strike a balance, setting expectations internally and shaping their management team, while learning about the organization, too.
Peter Crist,
chairman of Crist Kolder Associates, an executive-search firm, said new leaders typically spend the initial months looking to understand the talent within a company, learning employees’ strengths and weaknesses before making changes to staffing.
“Normally, a CEO from the outside coming in isn’t going to wipe the slate clean on the first day,” Mr. Crist said, adding that swift personnel changes can create uncertainty for the workers that remain. “There has to be both a stabilization of the enterprise model and importantly a stabilization of the talent, and it’s got to get done relatively soon,” he said.
Mr. Musk is hardly the first corporate iconoclast. He is also more than familiar with Twitter, having more than 100 million followers.
Twitter Purchased by Elon Musk: A Timeline of How It Happened
On top of that, he is acquiring a company that for years lagged behind its rivals in attracting users and generating revenue, and the industry broadly is facing a slowdown in growth and other challenges that have slashed the valuations of companies such as
Facebook
owner Meta Platforms Inc.
Some of Mr. Musk’s early actions struck corporate veterans as routine. He spent part of his week meeting with advertisers on video calls and in other settings, aiming to reassure customers that the platform remained a safe place for brands, the Journal reported. Several large advertisers, including
General Mills Inc.
and
Pfizer Inc.,
temporarily paused their advertising. Mr. Musk tweeted on Friday that Twitter had experienced a massive drop in revenue, which he said was due to “activist groups pressuring advertisers.”
Hubert Joly,
former CEO of retailer
Best Buy Co.
, said listening tours with customers and employees can be helpful in the initial period of engineering a turnaround. When Mr. Joly took the reins of Best Buy in 2012, he spent days in retail stores observing customer behavior and holding pizza meetings with staffers. In those gatherings, he asked three questions to employees: “‘What’s working? What’s not working? What do you need?’” Mr. Joly said.
Elon Musk has purchased Twitter, ending a monthslong saga over whether or not he would go through with his offer to acquire the social media platform. WSJ takes an inside look at the tweets, texts and filings to see exactly how the battle played out. Illustration: Jordan Kranse
Mr. Joly said that while he wanted to act fast, he resisted the temptation to quickly close stores or cut head count, as some proposed, or to immediately impose his ideas on the organization without understanding the existing dynamics. “My job was easy: Show up, ask these questions, listen carefully, take notes, and do what I was told because they had all of the answers,” he said of employees.
Mr. Musk has solicited feedback from some Twitter users, including prominent ones. He asked the author Stephen King whether he would consider paying a price of $8 a month to have his account verified. Members of Mr. Musk’s team also polled Twitter users about a subscription feature.
SHARE YOUR THOUGHTS
What do you think of Musk’s management style? Join the conversation below.
Twitter on Saturday said it has begun rolling out software updates to charge users $7.99 a month for its Twitter Blue subscription service, up from $4.99 currently. Subscribers get their accounts verified, a service that has been free and offers a blue check mark to notable accounts.
Mr. Musk has said in the past that he believes CEOs err when they allocate too much of their schedule to meetings, rather than focusing on refining a product. “Spend less time on finance, spend less time in conference rooms, less time on PowerPoint and more time just trying to make your product as amazing as possible,” he said in a Journal interview in 2020.
During an executive’s first few days at a company, though, leaders can become overwhelmed, advisers say. Some say it is important to focus on key strategic decisions, assemble a team and then delegate.
At an investment forum in New York on Friday, Mr. Musk said that after buying Twitter, he is now working 120 hours a week instead of his typical 70 or 80 hours. Still, he expected that to eventually change. “Once Twitter’s set on the right path, it’ll be much easier to manage than SpaceX or Tesla,” Mr. Musk said.
a self-driving trucking company, said Monday it had fired its chief executive and co-founder,
Xiaodi Hou.
The San Diego-based company said in a news release and securities filing that its board of directors on Sunday had ousted Mr. Hou, who was also the board chairman and chief technology officer.
Mr. Hou was fired in connection with a continuing investigation by members of the board, the release said. That review “led the board to conclude that a change of Chief Executive Officer was necessary,” the company said in the release.
The securities filing said that the board’s investigation found that TuSimple this year shared confidential information with Hydron Inc., a trucking startup with operations mostly in China and funded by Chinese investors. The filing also said that TuSimple’s decision to share the confidential information hadn’t been disclosed to the board before TuSimple entered into a business deal with Hydron.
TuSimple said it didn’t know whether Hydron shared, or publicly disclosed, the confidential information, the securities filing said.
Messrs. Hou and Chen didn’t immediately respond to a request for comment.
Mr. Hou’s termination was announced the day after The Wall Street Journal reported TuSimple and its leadership, principally Mr. Hou, faced investigations by the Federal Bureau of Investigation, Securities and Exchange Commission and Committee on Foreign Investment in the U.S., known as Cfius, into whether the company improperly financed and transferred technology to a Chinese startup, according to people with knowledge of the matter.
TuSimple’s stock plunged more than 44% Monday. Shares in the company are down more than 90% for the year.
Investigators at the FBI and SEC are looking at whether Mr. Hou breached fiduciary duties and securities laws by failing to properly disclose TuSimple’s relationship with Hydron, the China-backed startup founded in 2021 by TuSimple co-founder Mo Chen that says it is developing autonomous hydrogen-powered trucks, the Journal reported. Federal investigators are also probing whether TuSimple shared with Hydron intellectual property developed in the U.S. and whether that action defrauded TuSimple investors by sending valuable technology to an overseas adversary.
The Journal also has reported that the board in July began investigating similar issues, including whether TuSimple incubated Hydron in China without informing regulators, the TuSimple board or its shareholders, said other people familiar with the matter. A June business presentation from Hydron viewed by the Journal named TuSimple as Hydron’s first customer, and said TuSimple would purchase from Hydron several hundred hydrogen-powered trucks equipped with self-driving technology. A TuSimple spokesman said the company has considered an agreement to buy freight trucks from Hydron but isn’t a Hydron customer.
Newsletter Sign-up
The 10-Point.
A personal, guided tour to the best scoops and stories every day in The Wall Street Journal.
TuSimple’s securities filing on Monday said that TuSimple employees worked for Hydron and were paid, earning less than $300,000. The board wasn’t aware of this nor had members approve it, the filing said. Mr. Chen, who founded and leads Hydron, is TuSimple’s largest shareholder, owning about 11.8% of the company, according to FactSet.
Mr. Hou’s dismissal follows months of upheaval at the company, including the departures of its chief financial officer and chief legal officer and a sharp drop in its stock price. Much of the turmoil began when Mr. Hou took over as CEO in March, said former employees.
In April, one of TuSimple’s autonomous semi trucks crashed on an Arizona freeway. The accident revealed safety and security problems at TuSimple that former employees said leadership had dismissed, the Journal reported in August.
The company said
Ersin Yumer,
TuSimple’s executive vice president of operations, will serve as interim CEO while the board searches for Mr. Hou’s successor. Mr. Yumer previously worked on autonomous-vehicle technology at
Aurora Innovation Inc.,
Uber Technologies Inc.
and Argo AI, the autonomous-driving venture partly owned by
Ford Motor Co.
and
Volkswagen AG
that was shut down recently. Independent board director
Brad Buss,
the former chief financial officer at SolarCity Corp. and Cypress Semiconductor Corp., will be chairman, TuSimple said.
TuSimple said it would release its third-quarter earnings on Monday after the market closes. The earnings release was previously scheduled for Tuesday. The company, ahead of the results, said it remained on track to meet the full-year guidance disclosed in August, including ending the year with a cash balance of about $950 million.
Write to Heather Somerville at heather.somerville@wsj.com and Kate O’Keeffe at kathryn.okeeffe@wsj.com
fired several Twitter Inc. executives after completing his takeover of the company, according to people familiar with the matter, capping an unusual corporate battle and setting up one of the world’s most influential social-media platforms for potentially broad change.
Mr. Musk fired Chief Executive Parag Agrawal and Chief Financial Officer Ned Segal after the deal closed, the people said. Mr. Musk also fired Vijaya Gadde, Twitter’s top legal and policy executive, and Sean Edgett, general counsel. Spokespeople for Twitter didn’t comment.
Ask WSJ
The Musk-Twitter Deal
WSJ Financial Editor Charles Forelle sits down with Alexa Corse, WSJ reporter covering Twitter, at 1 p.m. ET Oct. 28 to discuss Elon Musk’s takeover of Twitter. What does the future hold for the platform? And what does this deal mean for Mr. Musk’s business empire?
Hours after those actions, Mr. Musk tweeted: “the bird is freed” in a seeming reference to Twitter, which has a blue bird as its logo.
Mr. Musk first agreed to buy Twitter in April for $44 billion, then threatened to walk away from the deal, before reversing course this month and committing to see through the acquisition. He previously indicated unhappiness with some of the top ranks at Twitter, at one point responding to a tweet from Mr. Agrawal with a poop emoji. He also used the site to mock Ms. Gadde, the top legal boss, tweeting an image overlaid with text that repeated allegations Twitter had a left-wing political bias.
It wasn’t immediately clear who would step into the top positions left vacant by Thursday’s exits. CNBC earlier reported the departures of Mr. Agrawal and Mr. Segal.
The deal, in which Twitter will again become a private company, adds to Mr. Musk’s expansive business reach, which includes running
Tesla Inc.,
the world’s most-valuable car company, and rocket company Space Exploration Technologies Corp., or SpaceX, among other endeavors. Mr. Musk, who had become Twitter’s largest individual shareholder, previously said he would pay for the acquisition mostly with cash, some contributed by co-investors, and $13 billion in debt.
There were signs this week indicating that Mr. Musk was moving closer to acquiring the social-media platform by Friday’s 5 p.m. deadline. Banks started sending money backing the deal, The Wall Street Journal reported. Mr. Musk also has changed his Twitter bio to “Chief Twit,” showed himself walking into the San Francisco headquarters of the social-media platform, and issued a statement on Twitter explaining his vision for the site to advertisers.
Closing the deal ends a monthslong saga of whether Mr. Musk would or wouldn’t purchase the company. The acquisition also puts one of the world’s most prominent social-media platforms under the control of the world’s richest person, with implications for the future of online discourse.
A self-described free-speech absolutist, Mr. Musk has pledged to limit content moderation in favor of emphasizing free speech. However, that approach risks causing conflicts with some advertisers, politicians and users who would prefer a more-moderated platform.
Elon Musk completed the deal for Twitter a day before a court-imposed deadline.
In a message to advertisers on Twitter on Thursday, Mr. Musk said he was buying the company to “have a common digital town square, where a wide range of beliefs can be debated in a healthy manner.” He said Twitter “cannot become a free-for-all hellscape, where anything can be said with no consequences!”
Mr. Musk said the platform must be “warm and welcoming to all” and suggested Twitter could let people “choose your desired experience according to your preferences, just as you can choose, for example, to see movies or play videogames ranging from all ages to mature.”
Mr. Musk’s decision to go through with the Twitter takeover came two weeks before a trial in Delaware was set to begin over the stalled deal. The judge presiding over the legal clash agreed to pause the litigation, granting a request by Mr. Musk for more time to complete the takeover. The judge gave Mr. Musk until Oct. 28 to follow through with his offer, or said she would schedule a November trial.
Mr. Musk offered in April to buy Twitter for $54.20 a share—higher than the company was valued at the time. In the months since the deal was struck, Twitter has faced efforts by Mr. Musk to abandon the deal, a whistleblower complaint in which Twitter’s former head of security accused the company of security and privacy problems, and unsuccessful talks to negotiate a lower price with Mr. Musk.
The New York Stock Exchange has suspended Twitter shares from trading, starting Friday. The stock closed Thursday at $53.70.
Mr. Musk’s takeover leaves big questions over the future of the platform, including how he might revamp its business model and how he might implement changes he has proposed for the way it polices content.
Like other social-media companies, Twitter heavily relies on digital advertising and has faced headwinds in recent months due to broad economic uncertainty. It will also be saddled with billions in debt as a result of the deal, and payments on those loans will add costs for a company that has posted a loss in eight of its past 10 fiscal years.
Twitter will be saddled with billions of dollars in debt as a result of the deal.
Photo:
Godofredo A. Vásquez/Associated Press
The deal turned into a wild business drama with little precedent. Mr. Musk moved to buy Twitter in April. After signing a merger agreement, however, he accused the company of misrepresenting the prevalence of fake and spam accounts on its platform, which Twitter denied.
He formally tried to abandon the deal in July, prompting Twitter to sue him to enforce the original merger agreement. Mr. Musk countersued.
In early October, Mr. Musk suddenly abandoned his legal battle with Twitter, with little public explanation. After his reversal, he tweeted that “Buying Twitter is an accelerant to creating X, the everything app.” He previously suggested he could create a social-media platform named X.com if he didn’t buy Twitter.
Eric Talley, a law professor at Columbia University, said after the most recent about-face that several factors were piling up against Mr. Musk, including rulings from the court denying some of Mr. Musk’s discovery requests. Chancellor Kathaleen McCormick, who was overseeing the case in Delaware, had called some of his data requests “absurdly broad.”
“He has spent months with various attempts to figure out ways out of this deal,” Mr. Talley said. “All those windows had started to close and some of them closed completely.”
Vijaya Gadde, Twitter’s top legal executive, whom Elon Musk mocked on the site, is among the ousted executives.
Photo:
Martina Albertazzi/Bloomberg News
Mr. Musk’s specific plans for the company remain unclear. He could return Twitter to public ownership after just a few years, the Journal previously reported.
By taking Twitter private, the billionaire entrepreneur likely can take more risks to jump-start the company’s business. “It’s going to be bumpy,” said Youssef Squali, lead internet analyst at Truist Securities. “He can take it away for a couple of years, really kind of re-engineer the whole thing,” Mr. Squali said.
Mr. Musk has suggested he wants to shift Twitter away from its advertising-heavy business model to other forms of revenue, including a greater emphasis on subscriptions. Advertising accounted for more than 90% of Twitter’s revenue in the second quarter of this year.
Newsletter Sign-up
Technology
A weekly digest of tech reviews, headlines, columns and your questions answered by WSJ’s Personal Tech gurus.
He said he would allow former President Donald Trump back on the platform, though Mr. Trump has said he doesn’t intend to return to it. Twitter banned Mr. Trump in the wake of the Jan. 6, 2021, attack on the U.S. Capitol, citing what the company called the risk of further incitement of violence.
“Twitter is obviously not going to be turned into some right wing nuthouse. Aiming to be as broadly inclusive as possible,” Mr. Musk said in a message that was among a trove released as part of the legal battle.
The prospect of Mr. Musk taking over Twitter, as well as the subsequent uncertainty over the deal, roiled many Twitter employees. Twitter has told employees that they will hear from Mr. Musk on Friday, according to an internal note reviewed by the Journal.
