Tesla CEO Elon Musk, who recently became Twitter’s largest individual shareholder, has decided not to join the social media company’s board, reports CNN.
Official statement
Twitter CEO Parag Agrawal tweeted the news Sunday night.
“Elon’s appointment to the board was to become officially effective 4/9, but Elon shared that same morning that he will no longer be joining the board,” Agrawal said in the tweet. “I believe this is for the best. We have and will always value input from our shareholders whether they are on our Board or not. Elon is our biggest shareholder and we will remain open to his input.”
A Twitter spokesperson confirmed Musk decided not to join the Twitter board and referred to Agrawal’s statement.
The development comes less than a week after the Tesla and SpaceX founder disclosed that he had purchased a more than 9% stake in the company, and Twitter (TWTR) said in a regulatory filing that it planned to appoint Musk to its board for a term ending in 2024. Both Musk and Twitter’s leadership had expressed excitement about his addition to the board.
Improvements to twitter
Musk tweeted Tuesday that he was “looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months!” And Twitter founder Jack Dorsey said that Musk and Agrawal would make “an incredible team.” Twitter’s stock surged after his initial purchase was disclosed.
Twitter’s shares
As part of his agreement to join the board, the Musk had committed to not acquiring more than 14.9% of the company’s shares during his term. Some corporate governance experts suggested that the move could have been a way of reining in Musk’s influence over the company. Now, that limitation is no longer in place, leaving the door open for Musk to potentially take a more aggressive stance by buying up more of Twitter’s shares.
In his tweet Sunday night announcing Musk’s reversal, Agrawal said the company’s board had “believed that 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.”
Corporate board member’s opinion
Corporate board members also typically share their suggestions for the company privately, which might have meant Musk would have had to stop tweeting about his ideas for Twitter. The announcement that Musk would no longer join the board came after he posted a series of tweets about the company over the weekend, including one in which he suggested removing the “w” from “Twitter” — an apparent crude joke that has since been deleted — and another in which he asked if Twitter is “dying” because some of its most-followed accounts don’t often tweet.
“In our opinion, the Twitter Board and Musk could not come to an agreement around Musk’s communications with the public (various polls) over Twitter as he likely needed to take a more back seat/quiet stance as part of joining the Board,” Wedbush analyst Dan Ives said in an investor note Monday. He added that Musk’s relationship with Twitter may now become “a ‘Game of Thrones’ battle between Musk and Twitter with the high likelihood that Elon takes a more hostile stance towards Twitter and further builds his active stake in the company.”
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Source: CNN
