Last week, it was indicated that Elon Musk was to be appointed to be a board member at Twitter (NYSE: TWTR), where he recently became the largest shareholder. And then in the morning of April 9th, when his appointment was set to become official, the billionaire informed the company that “he will no longer be joining the board.”
What gives?
In his note, Twitter CEO Parag Agrawal made two points clear:
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- Musk’s appointment to the board was contingent on a background check and his formal acceptance;
- It would make him a fiduciary of the company, and he, like all board members, will have to act in the best interestests of the company and all its shareholders, and the board believed this was the best path forward.
Unsurprisingly, Twitter is abuzz with speculation. It’s speculated that ongoing SEC and DOJ investigations might have been flagged in the background check.
But based on the Tweets that Musk shared over the weekend (many of them deleted), two other scenarios seem more likely: the first is that in not joining the board, he will not be limited to owning up to only 14.9% of the company’s shares, as his updated SEC filing states. The second is that it liberates him from the fiduciary duty that will require him to take a more passive role and limit his “free speech.”
Musk has been growing increasingly critical of Twitter, even suggesting in a poll that the platform does not adhere to free speech principles, and asking people if there’s a need for a new platform.
Over the weekend, Musk tweeted and then later deleted some of his ideas for Twitter. One was to get rid of ads for paying subscribers, the other was a poll on removing the “w” in Twitter, and another that mused about how the company’s headquarters should be converted into a homeless shelter “since no one shows up anyway.”
Among the Tweets that survived was a series about the social media giant’s viability, reinforcing his earlier question about the need for a new platform. Musk asked: “Is Twitter dying?” after noting the platform’s most followed accounts have not been active for a while.
As majority shareholder (and the richest person in the world) without the trappings of the board, the billionaire is now in a position to either go the activist investor route, or gear up for a potential hostile takeover. In what we can only call a Musk-y turn of events, he gets what he appears to want, and it appears it might not be “the best path forward” for the Twitter we know now.
The premature inclusion of his name on the company’s board of directors page might have been an April Fool’s prank after all.
Information for this briefing was found via Edgar, Twitter and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
