Former President Donald Trump’s compensation arrangement with Trump Media & Technology Group has attracted attention due to its performance-based structure. A recent filing with the Securities and Exchange Commission (SEC) revealed that Trump could potentially receive millions of “earnout” shares contingent upon specific performance metrics tied to the company’s stock price.
Under this arrangement, Trump stands to earn up to 36 million earnout shares if Trump Media’s dollar volume-weighted average price (DVWAP) meets certain thresholds for a minimum number of trading days within a specified period. These thresholds include DVWAP levels of $12.50, $15, and $17.50, each corresponding to different numbers of shares issued to certain shareholders. Trump could potentially receive 90% of the total earnout shares, amounting to 36 million shares, if all 40 million of these shares are issued.
Trump Media, the parent company of Truth Social, made its debut on the Nasdaq under the ticker symbol DJT following its merger with Digital World Acquisition Corp., a special purpose acquisition company (SPAC). As part of the merger agreement, Trump exchanged his private shares in Trump Media for 78.75 million shares of common stock.
However, the market performance of Trump Media’s stock has faced challenges, with shares experiencing a significant decline. In a recent trading session, shares closed down 18% at less than $27 per share, resulting in a reduced market capitalization of approximately $3.65 billion compared to its initial highs during the first week of trading. Despite this downturn, Trump Media is taking steps to facilitate the resale of shares by registering additional common stock and warrants for potential exercise.
The decision to offer additional shares for resale represents a substantial percentage of the company’s public float and outstanding shares, potentially influencing investor sentiment. Nevertheless, Trump Media remains optimistic about the potential for positive returns for shareholders, emphasizing the value proposition of its common stock.
Overall, Trump’s potential earnings in Trump Media & Technology Group are contingent on the company’s stock performance and its ability to meet specific performance thresholds. This compensation structure underscores the dynamic nature of executive compensation arrangements within public companies and the potential impact on shareholder value.