X, formerly Twitter, valued at $19 billion in new employee stock plan

Staff received an email on Monday regarding the equity grant agreements, according to a screenshot viewed by Fortune.

This new valuation comes a year after Musk purchased the platform for $44 billion, and recent reporting claims that the banks involved with financing the deal are still grappling with efforts to mitigate the adverse impact on their financial standings, expecting to lose roughly $2 billion, the Wall Street Journal reported. In July, Musk posted that X is “still negative cash flow” due to a “50% drop in advertising revenue plus heavy debt load.”

Musk has laid off thousands of employees since acquiring Twitter, and the company’s headcount is now about 25% of what it was prior to Musk’s takeover. The erratic multi-billionaire, who is also the CEO of Tesla and SpaceX, has said he wants to turn X into an “everything app” that melds the social media platform with payment and commerce capabilities. But so far the company’s trajectory under Musk’s stewardship has been marked by chaos, with high-profile technical glitches, controversies over content moderation, and feature changes that have upset many longstanding users.

In May Musk tapped NBC executive Linda Yaccarino to be the CEO, in a bid to bring advertisers back to the platform while freeing Musk to focus on the product side of the business. While the stock compensation plan values X at less than half of what Musk paid for the company, the actual value of the now privately-held company remains somewhat subjective. Earlier this week, Axios reported that Fidelity has marked down the value of its Twitter debt by roughly 65% over the first eleven months of Musk’s ownership.

According to the note sent to X employees on Monday, the new $19 billion valuation, with a $45 per share price, was determined “by the board of directors, based on a number of factors in a manner that complies with applicable tax rules.” It’s not clear who sits on the X board of directors. The $45 per share price is not directly comparable to the $54.20 per share price that Musk paid for Twitter when it was a publicly traded company in October 2022.

Employees who are part of the new equity compensation plan will receive equity in the form of restricted stock units, which are “earned” over a four year period, according to documents viewed by Fortune. The first tranche of an employee’s RSUs vest after six months.

Below are some edited portions of a frequently asked questions document sent to staff on Monday:

1. RSU Quantity Determination: The number of RSUs employees receive is calculated by dividing the communicated award value in USD by the Fair Market Value (FMV) and rounding up to the nearest whole share.
2. Taxation of RSUs: The tax treatment of RSUs depends on local statutory laws. With double-trigger RSUs, employees are typically not taxed until both a time-based vesting requirement and a liquidity event requirement (for instance, an IPO or change in control) are met.
3. Deferred Cash Awards: If you were employed by Twitter at the time of acquisition (October 27, 2022), unvested Twitter RSUs were converted into deferred cash awards at $54.20 per share. These awards will vest per the original schedule and be paid out separately from any X Stock Awards.
4. Earning RSUs: RSUs are typically earned over four years with a 6-month cliff, meaning the first portion becomes available after six months of employment. Promotion and exceptional performance grants follow a different schedule, typically quarterly on January 1, July 1, and October 1.
5. Vesting RSUs: Earned RSUs fully vest upon satisfaction of a liquidity event requirement, such as an IPO or change in control, within seven years of the grant. If this requirement isn’t met, the Earned RSUs may be forfeited.
6. Termination of Employment: If you leave the company before RSUs are fully vested, unearned Stock Awards are typically canceled. Time-vested portions may remain outstanding, but earned RSUs will be eligible for full vesting based on the grant agreement. If RSUs don’t fully vest within seven years from the grant date, they may be forfeited.
7. Income Tax Liability: The grant of a Stock Award doesn’t result in immediate income tax liability. Taxation typically occurs upon the settlement of shares when the “second trigger” (e.g., liquidity event) takes place.