In a major about face, Tesla’s Elon Musk will not join the Twitter board, reversing course less than a week after becoming the technology company’s biggest shareholder and being named to do so.
Twitter CEO Parag Agrawal revealed Musk’s surprise decision in a Twitter statement on Sunday, US time.
The news will see a shake-up in the Twitter share when trading resumes in the US on Monday.
The Twitter CEO said that while Musk decided he would not take up his board position from Saturday (when it was due to start) Musk remains the largest shareholder of Twitter, and the company will remain open to his input.
Musk had told Twitter on Saturday morning that he would not, in fact, take the board seat.
Musk’s appointment would have started been “contingent on a background check and formal acceptance,” according to Agrawal.
“We were excited to collaborate and clear about the risks. We also believed that 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 in his tweet.
The Twitter CEO did not say whether Musk gave specific reasons for changing his mind about taking on the new boardroom position.
On April 5, both parties said he would be joining the Twitter board. A day earlier, the Tesla CEO and world’s richest person disclosed via financial filings that he’s the social media company’s biggest shareholder with a 9.2% stake.
Musk initially characterised his shareholding as passive, then days later changed that to active. He also started buying Twitter shares much earlier – in late January – than the initial impression the first filing gave of March 14.
US analysts said Musk actually didn’t conform to regulations from the US Securities and Exchange Commission about timely filings of major shareholdings. He was in fact 11 days late in his shareholding filing and brokers said he saw a gain of $US300 million or more in the value of his Twitter holding in that time.
There has been no comment from the SEC about this apparent failure to meet the disclosure timings, but the usual way we learn of it is via a filing with the SEC by the company involved, or in this case, the shareholder in Mr Musk.
A financial filing from Twitter after Musk was appointed to the board specified that as long as Musk was a board member, he would be limited to owning no more than a 14.9% stake in the company’s outstanding ordinary shares, including through derivative securities, swaps, or hedging transactions.
Now he’s not going to be a board Musk could theoretically increase his 9.2% stake beyond that limit.
US media reports said that over the weekend, without revealing that he had turned down the board seat at Twitter, Musk posted a number of ideas to transform the social media company and its products – just as he continued to tweet his ideas about the company while buying shares before his first disclosure.
