Twitter’s history is as rich in plot twists as a soap opera, but the short-lived episode of Elon Musk joining and then deciding not to join the social media firm’s board has once again exposed its flaky governance. The world’s richest man on Saturday bailed on becoming a director just days after agreeing to do so. The board’s haste in inviting him in reflects poorly on the $37 billion company.
Musk announced he had bought a 9% stake in Twitter last Monday morning and then agreed to join the board later that day. As part of the deal, he committed not to increase his stake beyond 14.9%. The three-paragraph agreement reflects the speed with which it was drawn up. A similar 2020 arrangement between Twitter and activist investor Elliott Management ran to 14 pages.
How the Tesla chief executive now features in Twitter’s future is a mystery. He could try to take over the company, remain the largest shareholder and persistent critic, or lose interest and walk away. A new filing with the Securities and Exchange Commission says he may express his views of the company, management and service through social media. That would have been harder to do if he was bound by the responsibilities of being a director.
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The board’s poor decision making is clearer, however. Musk has had his share of run-ins with regulators. In 2018 he submitted to an agreement with the SEC that required Tesla lawyers to approve his Tweets about the company after he tweeted that he was considering taking the electric-car maker private at $420 a share. Musk’s recent declaration about his Twitter stake was filed late.
His loose-cannon social media activity should have been another red flag. Before being invited onto the board, Musk had publicly questioned whether Twitter is dedicated to free speech and wondered whether he should start an alternative service. After he was appointed, he publicly questioned whether Twitter was dying because prominent accounts post rarely and asked whether Twitter’s headquarters should be turned into a homeless shelter.
Perhaps Twitter’s board hoped to neuter Musk by bringing him onto the board, and Musk rebelled. However, he has built his career, wealth and persona around flouting rules. Making him a director should have required more careful deliberation. Twitter’s rush shows how badly it is governed.
Let me break this down for you:
Elon became largest shareholder for Free Speech
Elon was told to play nice and not speak freely @elonmusk #Twitter #ElonMusk
— Tank (@TankTDS) April 11, 2022
Context news
Elon Musk told Twitter on April 9 he would not join the company’s board, reversing a decision taken five days earlier.
A Securities and Exchange Commission filing on April 11 stated that the Tesla founder was allowed to sell or buy additional shares in Twitter, and he may express his views with respect to the Twitter’s business, products and service through social media or other channels. Musk had previously agreed not to increase his 9% stake in the company beyond 14.9%.
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Musk recently deleted several tweets including a poll on whether Twitter headquarters should be turned into a homeless shelter, suggestions that users who sign up for a paid service should receive an authentication checkmark and not receive ads, and questioning whether Twitter was dying because several of the most followed accounts posted rarely.
Twitter Chief Executive Parag Agrawal announced Musk’s decision in a Tweet on April 11.
Twitter shares were up 2.4% at $47.3 by 1430 GMT on April 11.
Reuters with additional input by GVS News Desk