Tesla CEO Elon Musk won’t join Twitter’s board after all
Twitter’s largest investor, billionaire Elon Musk, is reversing course and will no longer join the company’s board of directors less than a week after being awarded a seat.
Twitter CEO Parag Agrawal announced the news, which followed a weekend of Musk tweets suggesting changes to Twitter, including making the site ad-free. Nearly 90 per cent of Twitter’s 2021 revenue came from ads.
“Elon’s appointment to the board was to become officially effective on 4/9, but Elon shared that same morning that he would not be joining the board,” Agrawal wrote in a reposted note originally sent to Twitter employees. “I believe this is for the best.”
Agrawal didn’t offer an explanation for Musk’s apparent decision. He said the board understood the risks of having Musk, who is now the company’s largest shareholder, as a member. But at the time it “believed having Elon as a fiduciary of the company, where he, like all board members, has to act in the best interests of the company and all our shareholders, was the best path forward,” he wrote.
The rapidly evolving relationship between Musk and Twitter began exactly one week ago when regulatory filings revealed that the mercurial billionaire had amassed a 9.2 per cent stake in the social media platform. A later financial filing showed that Musk had been buying up the shares in almost daily batches starting January 31.
Twitter gave Musk a seat on the board on the condition that he not own more than 14.9 per cent of the company’s outstanding stock, according to a regulatory filing.
Musk’s board role could have made him a “thorn in the side of management” and given him an influential inside voice in the platform’s future, but it could have also discouraged him from rocking the boat too much, said Chester Spatt, a finance professor at Carnegie Mellon University and former chief economist at the US Securities and Exchange Commission.
“There’s an old cliché about keeping somebody inside the tent,” Spatt said. “There were advantages to having him constrained a bit.”
In a letter to employees announcing Musk’s departure, Agrawal wrote: “There will be distractions ahead, but our goals and priorities remain unchanged.”
Musk has been one of Twitter’s loudest critics, saying it hasn’t been living up to free speech principles. With his departure, Spatt said that Musk, as the largest shareholder, could potentially “swing back hard” at Twitter executives and board members and force the company to move in a new direction.
“At some point he could throw the directors out, he could replace the board,” Spatt said. “He could probably launch that with his current 9-per cent stake and potentially be very successful.”
Shares of Twitter Inc, which jumped nearly 30 per cent after Musk’s stake became public last week, fell almost two per cent at the opening bell on Monday.
Musk’s 80.5 million Twitter followers make him one of the most popular figures on the platform, rivalling pop stars like Ariana Grande and Lady Gaga. But his prolific tweeting has sometimes got him into trouble.
He has been locked in a long-running dispute with the US Securities and Exchange Commission, SEC, over his Twitter activity. Musk and Tesla in 2018 agreed to pay US$40 million in civil fines and for Musk to have his tweets approved by a corporate lawyer.
His delay in notifying regulators of his growing stake in Twitter could lead to more trouble with the SEC.
Musk, before reversing course on the board seat, sent out a number of tweets over the weekend referencing potential changes at Twitter. Many of them – such as his proposal for an ad-free Twitter or turning the social media company’s San Francisco headquarters into a homeless shelter – have since been deleted.
He then posted a few cryptic tweets late Sunday, including one showing a meme saying “In all fairness, your honor, my client was in goblin mode”, followed by one saying, “Explains everything”. Another, later tweet was of an emoji with a hand over its mouth.
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