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 adfree. Nearly 90% 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 Tesla 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 the mercurial billionaire had amassed a 9.2% stake in the social media platform. A later financial filing showed that Musk had been buying up the shares in almost daily batches starting Jan. 31.
Twitter gave Musk a seat on the board on the condition that he not own more than 14.9% 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 U.S. 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.”
While Musk has been one of Twitter’s loudest critics, the sudden withdrawal from the board, which became official Saturday, could signal that relations between Musk and Twitter will become more acrimonious.
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% stake and potentially be very successful.”
Shares of Twitter Inc., which jumped nearly 30% after Musk’s stake became public last week, fell almost 2% at the opening bell Monday.
Musk’s 80.5 million Twitter followers make him one of the most popular figures on the platform, rivaling pop stars like Ariana Grande and Lady Gaga.