If Elon bought outstanding stock, then employees with stock holdings at time of acquisition would have been bought out. But what happens to values of stock awards that were made to employees after the acquisition closed?
Here’s why I ask… For a a long term employee with significant vested options, a nice profit was available at the acquisition. For shorter tenure employees (or any employees) with options that vested after the acquisition, are any newly vested options now worthless?
I have decent knowledge of equity comp plans, but am not a true subject matter expert. Some of this question is probably best answered by a SME.
The real answer will depend on how Twitter's board handles equity comp. Twitter likely had some type of ESPP or other direct stock ownership plan before the acquisition. It's most common for public companies to use a direct share ownership program while private companies will use an option plan. This isn't a law, just the most common scenario.
On the acquisition date, Elon Musk purchased every single outstanding share, whether owned by an employee or anyone else. The equity comp plan likely would have been terminated as of the acquisition date, so any unvested shares would be forfeit. The board should have approved some new equity comp plan plan effective as of the acquisition date. This would most likely be an option (ESOP) plan.
The challenge is that options need to be issued at fair-market-value (FMV) for the shares. This isn't legally required, but it's a massive tax headache for employees if you do anything other than FMV. As of a few weeks ago, the FMV was $44B. The whole world knows the company isn't worth $44B, but that's how the accountants look at it until they get a new external valuation (409a). So Twitter is likely giving out options that are effectively worthless. Or they realized they're worthless and are giving cash bonuses instead.