Twitter gets involved in Elon Musk’s problem

SAN FRANCISCO – Bright and early Monday, Elon Musk sent a surprisingly new document to the government.

In it, the world’s richest man has revealed his potential intentions towards Twitter, where he has a 9.2 percent stake, following how much his position has changed drastically since a week ago.

According to documents filed with the Securities and Exchange Commission, Mr Musk could, if he chooses, buy more shares of Twitter and increase company ownership. He can freely express his views about Twitter on social media or other channels, the document states. And he “reserves the right to change his plan at any time, as he sees fit.”

It was a promise – or perhaps it was a threat. Either way, the filing has overshadowed the treacherous situation that Twitter has now found itself in. Mr. Musk, 50, one of Twitter’s largest shareholders and one of its highest-profile users, can use the social media platform against himself very well and even buy enough shares. Occupy the company.

“Twitter has always suffered more than its fair share of unemployment,” said Jason Goldman, who was on Twitter’s founding team and has served on its board of directors in the past. “But at least using our products has not been actively trolled by potential board members.”

After a week of high-stakes drama between the filing billionaire and the company. Last Monday, Twitter revealed that Mr Musk had invested in the company, which is now worth more than $ 3 billion. A day later, he was invited to Twitter’s 11-person board and agreed not to own or occupy more than 14.9 percent of the company. Then on Sunday, Twitter abruptly said that all these bets were closed and that Mr. Musk would not be the director.

Mr Musk, who has more than 81 million followers on Twitter, is unclear what exactly happened between the company’s executives and board members. But that leaves Twitter – which has survived the founding infighting, boardroom revolt and the anger of outside shareholders – with any other active investor.

Mr Musk, who heads the electric car maker Tesla and rocket company SpaceX, is known for being unpredictable and outspoken, often using Twitter to criticize, insult and troll others. By not joining the board, he freed himself from the corporate governance rules that required him to act in the best interests of the company and its shareholders.

After informing the company of his decision on Saturday morning, Mr. Musk leaned towards that independence. He announced on Twitter that he was in “goblin mode” and suggested removing “W” from the company’s name to make it more obscene and open its San Francisco headquarters to house the homeless. He later deleted some posts.

“It’s not general activism or, obviously, something like the activism we’ve seen before,” said L. Klein, co-chair of Activism Group, a global shareholder in Roth & Jabel, law firm Schultz. “Elon Musk doesn’t do things that people have seen before.”

Patrick Gadson, co-head of the practice of shareholder activism at Vinson & Elkins, another law firm, said he sympathized with Twitter. “I never wish that any director or director I represent would have to deal with this situation,” he said.

Mr Musk did not respond to a request for comment. He did not directly address the situation on Twitter’s board, but did prefer a tweet that suggested the agency wanted to limit its freedom of speech.

Parag Agarwal, Twitter’s chief executive, hinted at how Mr Musk should be treated as a “trusted person of the company”. A post On sunday. Twitter, which published a biography of Mr Musk as a member of its board that was still visible late Sunday, declined to comment Monday.

Credit …Via Twitter

Mr Musk has long shown significant disrespect for corporate governance. In 2018, he was accused of securities fraud after he mistakenly tweeted that he had secured funds to take Tesla into private. Mr Musk later agreed to pay the SEC a 20 million fine and stepped down as chairman of Tesla for three years.

He also agreed to allow Tesla to review his public statements about the company. But in 2019, the SEC asked a judge to disrespect him for violating the terms of the settlement by incorrectly tweeting about Tesla.

Inside Twitter on Monday, staff were frustrated and concerned about Mr Musk’s activities, according to half a dozen current and former staff members who were not allowed to speak in public. Billionaire suggested over the weekend that Twitter had turned its headquarters into a homeless shelter because “no one was seen,” and staffers questioned how Mr. Musk would know he hadn’t visited the building in a while. They further noted that Mr. Musk, whose total value is estimated at more than $ 270 billion, could easily afford to help the homeless in San Francisco.

Others said they were annoyed by Mr Musk’s tweets criticizing the company’s products and business model, noting that he did not appreciate the timing and thought that Twitter’s services had been updated year after year and that he had no knowledge of product street maps. Some employees said they were relieved after reading that Mr Musk would not join the board of directors, according to those who saw internal communication on Twitter.

While it still appears that Mr. Musk will join the board, Mr. Agarwal scheduled a question-and-answer session for Mr. Musk to address staff concerns. A person familiar with the decision said the session had been canceled.

Mr Musk’s push is the second time in two years that Twitter has dealt with an active investor. In 2020, investment firm Elliott Management acquired a 4 percent stake and used its position to push for change, including the removal of Jack Dorsey as chief executive and further aggressive financial growth. Mr Dorsey resigned in November.

Elliott’s approach follows a common formula for activist investors: acquire a significant stake in a company and then push for changes in management and strategy to raise stock prices.

“Usually an employee’s intentions are very clear,” said Rich Greenfield, an analyst at Lightshed Ventures, a venture capital investment fund. But “we don’t know what Elon Musk’s real motivation is. Is this Elon joking? Is this Elon trying to influence change? Is this Elon trying to run the stock more? “

Particularly sensitive to Twitter activists, analysts say, is because its founders have not shaped the company’s stock in a way that gives them more control. The founders of Google and Facebook have retained the power to vote on shares, giving them a big grip on their company’s direction.

Natasha Lamb, a managing partner at Arjuna Capital, an activist investment firm that owns some Twitter stocks, said Mr Musk was taking a more casual approach than other activist investors.

“Musk is using Twitter to get his opinion heard, but it’s not a core activity,” he said. “It simply came to our notice then.

What’s fun for Mr. Musk may be less for Twitter. Relief among Twitter employees that he would no longer be joining the board was short-lived, current and former employees said, when they realized he was no longer bound by a deal to buy more stock or take over the company.

Mr Musk could continue to play with Twitter, with current and former employees saying they have realized. Several added that they were afraid of what might happen next.

Lauren Hirsch Contributing Reporting.

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