Twitter adds Musk to board of directors

Elon Musk is joining the board of Twitter.

The company announced the appointment on Tuesday, one day after Musk revealed that he had bought a 9.2% stake in the social media giant, a purchase that appeared to make him its largest shareholder. That news sent Twitter’s shares skyrocketing more than 20% on Monday.

Musk is set to be appointed to a board seat that expires in 2024. For as long as he is serving on Twitter’s board, and for 90 days after if he chooses to step down, he will not be allowed to own more than 14.9% of Twitter’s stock.

“Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our board,” Twitter’s chief executive, Parag Agrawal, tweeted on Tuesday.

The filing detailing Musk’s investment in Twitter was dated March 14, which is the day he crossed the 5% threshold that requires regulatory disclosure. He could have been building up his stake long before then.

“Looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months,” Musk tweeted in reply to Agrawal.

Musk had been quiet about his intentions for the purchase of a big stake in Twitter, which was worth about $2.9 billion before it was disclosed but is now worth much more. He registered with the Securities and Exchange Commission via a document called a 13G filing, indicating that he planned for the investment to be passive and that he did not intend to pursue a larger role in the company.

Twitter’s announcement on Tuesday said that other than the agreement that he limit the size of his stake in the company, there were no “arrangements or understandings” between Musk and Twitter that led to his director role.

“It is theoretically possible” to join a board in a “passive monitoring capacity,” said Joshua Mitts, a professor of corporate law at Columbia Law School. But the presumption is that someone would join a board to effectively exert influence on the company, he said.

“It doesn’t mean that you couldn’t try and convince the SEC otherwise, but I think it would be an uphill battle,” Mitts said.