Twitter outside director pay capped at $16 million annually

Twitter disclosed for the first time in its revised prospectus on Tuesday the remuneration paid to external directors: a maximum of $16 million in cash and stock in the first year, followed by an annual maximum of $8 million thereafter.

According to Twitter's prospectus, under the 2013 plan, the annual cash bonus for external shareholders will not exceed $4 million, with the first year capped at $8 million; the annual stock reward will not exceed $4 million, also capped at $8 million in the first year.

By any standard, this compensation is very generous, especially for a newly listed company. For comparison, five out of six external directors at Facebook received $50,000 in compensation last year. The sixth director, Erskine Bowles, received $70,000. Both Bowles and Netflix CEO Reed Hastings were granted approximately $600,000 worth of restricted shares when they joined Facebook’s board in 2011.

In March this year, Facebook appointed its seventh external director, Susan D. Desmond-Hellmann, the Chancellor of the University of California, San Francisco. She was granted restricted shares worth about $530,000 upon joining.

Twitter has granted significantly more stock to its external directors compared to Facebook. According to IPO documents, Peter Currie and David RosenBlatt were granted 400,000 restricted shares each. Since these grants occurred before 2012, the specific terms of the grants were not disclosed. However, based on Twitter's recent internal valuation of $20.62 per share, these shares are now worth several million dollars.

Peter Chernin, a former News Corporation executive who joined Twitter's board last year, was granted restricted shares worth $3.68 million, which will be fully vested by 2016.

Other non-employee directors of Twitter include Benchmark Capital general partner Peter Fenton, as well as Twitter co-founders Jack Dorsey and Evan Williams. Fenton owns 6.7% of the company, current Chairman Dorsey holds options for 2 million shares, and Williams owns 12% of the company.

Twitter has yet to comment on this matter.