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Is Twitter, Inc.'s Policy for Compensating Board Members Good for Investors?

By Tim Beyers - Mar 13, 2014 at 8:05PM

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Amid reports of what looks like reckless spending at headquarters, a Fool considers the company's policy for compensating those in charging for producing returns for shareholders.

For all the hubbub over Twitter ( TWTR -2.74% ) spending on 19th century log cabins for its cafeteria, the company's policy for compensating board members is anything but excessive. Fool contributor Tim Beyers explains why in the following video.

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Twitter's latest SEC filing specifies how it will pay board members. Source: Tim Beyers/The Motley Fool.

In an exhibit to its 10-K annual filing, Twitter revealed the details for how it plans to compensate its directors for their service. Each member will earn $12,500 quarterly, or $50,000 per year. Those who serve on the Audit and Compensation committees also earn extra fees, while extra director is also eligible for annual awards of restricted stock valued at up $225,000. Pretty standard stuff, all in all.

So what's the big deal? Board members get to choose how they're compensated. They can either opt for cash payments, or exchange those payments in favor of adding to their annual award of restricted shares, in effect betting on Twitter right alongside everyday shareholders.

A bird's-eye view of the common area at Twitter. Credit: Aaron Durand for Twitter.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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