Costolo’s Family Trusts Sell 50% of Twitter Stock This MonthCaleb Melby and Sarah Frier
Twitter Inc. Chief Executive Officer Dick Costolo’s family trusts sold half their shares in the social network this month, accelerating sales that started in July.
The Richard Costolo 2001 Living Trust and Lorin Costolo 2001 Living Trust, named for his wife, sold 283,460 shares in transactions on Nov. 3 and Nov. 17 for $11.6 million, according to regulatory filings. Costolo owns 36,028 shares in the company directly, 509,828 unvested restricted stock units and 283,460 shares in the trusts after the sales.
Up until July, the CEO and his family trusts hadn’t sold a single share of Twitter stock. That month, he sold 16,698 shares, followed by 20,106 shares in October. In a Nov. 3 filing, the CEO for the first time included the mention of a 10b5-1 trading plan, typically adopted by executives to sell stock on a regular basis. Twitter has no stock ownership requirements for its executives.
“Dick’s stock sales were done in accordance with a trading plan put on file 90 days ago to help him diversify his investments over time,” said Jim Prosser, a spokesman for Twitter, adding that the plan was put in place before the sales started.
Costolo has been in the spotlight as San Francisco-based Twitter grapples with slowing user growth and a stock that has fallen more than 35 percent this year. In an April filing, Costolo and other insiders such as Twitter co-founder Jack Dorsey had pledged to hold onto their shares around the time that a lockup expired. Other executives, including then-Chief Financial Officer Mike Gupta and then-Chief Operating Officer Ali Rowghani, sold in May after the lockup on insider sales was lifted.
Investors have questioned Costolo’s management following some of the executive departures this year, including the ouster of Rowghani and the replacement of Gupta. Standard & Poor’s earlier this month gave Twitter’s debt an unsolicited junk rating.
Costolo has mounted a defense of the microblogging service, saying at Twitter’s first analyst day on Nov. 12 that it has opportunities to capture 500 million more users who visit the site each month without logging in. Twitter’s early backers, including investor Chris Sacca and venture capitalist Ben Horowitz, have also spoken out to say Costolo has done a good job.
Costolo also has 8.52 million options worth $324 million, according to data compiled by Bloomberg. Most of those are currently exercisable, including 4.03 million granted at $0.43 in 2009 and 3.17 million granted at $1.83 in 2010, prior to the company’s IPO.
In an April filing, Twitter said Costolo’s salary was dropping to $14,000 a year from $130,250 in 2013. Typical stock ownership requirements are expressed as a multiple of an executive’s base salary.
Twitter shares rose less than 1 percent to $39.81 at the close in New York.
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