Twitter’s CEO And Other Top Shareholders Won’t Be Selling Shares

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Twitter this morning signaled to investors that its founders and board still believe in the long-term value of the company, with news that CEO Dick Costolo, plus co-founders and board members Jack Dorsey and Evan Williams, as well as Benchmark, have no intention of selling their shares of Twitter common stock. The news was revealed via a filing with the Securities and Exchange Commission, released this morning.

The filing’s timing comes just ahead of Twitter’s first major lock-up expiration date, on May 5th, which makes some 500 million shares of stock available (lock-up periods prevent large shareholders from selling stock immediately following an IPO). Twitter’s employees will also now have the chance to cash out and sell, and likely many will be taking advantage of that opportunity. But Twitter’s leadership has been taking steps to ensure its investors know that it’s in it for the long haul.

In September 2012, shortly before Facebook’s biggest lock-up expiration, Mark Zuckerberg and a few board members also informed the SEC that they had no plan to sell shares. It worked quite well as shares popped more than 10 percent on the day of the expiration.

In another example, the company is planning to reveal its company’s Q1 2014 earnings on April 29th, 2014, before the lock-up expiration – something which indicates Twitter will have positive results to share. When companies report earnings after a lock-up, it’s often a signal that bad news could be on its way.

The full SEC filing is here.

Here’s the relevant text:

Jack Dorsey and Evan Williams, co-founders of Twitter, and our Chief Executive Officer, Richard Costolo, have informed us that they have no current plans to sell any of their shares of Twitter common stock. If Messrs. Dorsey, Williams or Costolo decide to sell, they are required by our policies to do so pursuant to a trading plan intended to comply with the requirements of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (a “10b5-1 Plan”). We require any 10b5-1 Plan to be entered into during an open trading window and to have a “cooling-off” period, so the earliest Messrs. Dorsey, Williams and Costolo could sell would be 90 days after our next open window. Additionally, Benchmark venture capital funds, which are affiliated with a member of our board of directors, have informed us they have no present intention to sell or distribute stock to their limited partners before or immediately after the expiration of our lockup on May 5, 2014.

Romain Dillet contributed to this article.