Tesla CEO Elon Musk won’t join Twitter’s board after all

SAN FRANCISCO – Billionaire Elon Musk, a single of Twitter’s major shareholders, is reversing class and will no longer be part of the company’s board of directors, fewer than a 7 days after currently being awarded a seat.

Twitter CEO Parag Agrawal announced the information, which adopted a weekend of Musk tweets suggesting modifications to Twitter, which includes producing the site advertisement-cost-free. Virtually 90% of Twitter’s 2021 income came from adverts.

“Elon’s appointment to the board was to turn out to be formally efficient on 4/9, but Elon shared that same morning that he would not be joining the board,” Agrawal wrote in a reposted notice initially despatched to Twitter workers. “I believe this is for the finest.”

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Agrawal failed to give an explanation for Musk’s evident conclusion. He explained the board recognized the challenges of acquiring Musk, who is now the firm’s most significant individual shareholder, as a member. But at the time it “believed obtaining Elon as a fiduciary of the enterprise, the place he, like all board customers, has to act in the ideal passions of the company and all our shareholders, was the finest path forward,” he wrote.

It was just a 7 days earlier that regulatory filings unveiled Musk had quickly amassed a somewhat even bigger than 9% stake in the social media system. The mercurial billionaire had been getting shares in virtually everyday batches starting Jan. 31. Only Vanguard Group’s suite of mutual resources and ETFs controls far more Twitter shares.

Twitter quickly gave Musk a seat on the board on the affliction that he not very own additional than 14.9% of the company’s remarkable stock, according to a regulatory submitting.

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Now that Musk has backed out of the deal, he is absolutely free to create a even bigger stake in Twitter, most likely to try out to acquire around the enterprise or to drive for a new slate of directors to change its way.

“If you want to acquire about a enterprise, you’re normally in a better posture to not be on its board,” mentioned Harry Kraemer, medical professor at Northwestern University’s Kellogg Faculty of Administration.

Which is since a board member’s responsibility is to get the very best benefit for all the company’s shareholders.

“Going on a board has a really particular obligation to make positive you are not undertaking something in your individual own desire,” claimed Kraemer, also a previous chairman and CEO of Baxter Intercontinental.

In a regulatory submitting Monday, Musk reported he had “no preset programs or intentions” about how to use his influence on Twitter but that he may possibly talk about with its board and management his feelings on possible business combinations, approach and other matters. He added that he could specific his sights “through social media or other channels.”

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If Musk had taken a board seat, it may perhaps have discouraged him from rocking the boat far too significantly, mentioned Chester Spatt, a finance professor at Carnegie Mellon University and previous chief economist at the U.S. Securities and Exchange Commission.

“There’s an previous cliché about trying to keep somebody within the tent,” Spatt claimed. “There had been strengths to obtaining him constrained a little bit.”

Though Musk has been just one of Twitter’s loudest critics, the unexpected withdrawal from the board, which turned formal Saturday, could sign that relations in between Musk and Twitter will become more acrimonious.

“At some issue he could throw the directors out, he could change the board,” Spatt said.

In a letter to workforce saying Musk’s departure, Agrawal wrote that, “There will be distractions forward, but our aims and priorities remain unchanged.”

Shares of Twitter Inc., which jumped just about 30% just after Musk’s stake turned public last week, were being 2.8% better on Monday immediately after swinging between gains and losses by means of the morning.

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Musk’s 81 million Twitter followers make him 1 of the most common figures on the system, rivaling pop stars like Ariana Grande and Woman Gaga. But his prolific tweeting has at times gotten him into problems with the SEC and other people.

Musk and Tesla in 2018 agreed to fork out $40 million in civil fines and for Musk to have his tweets approved by a company law firm just after he tweeted about possessing the money to consider Tesla non-public at $420 for each share. That did not take place but the tweet induced Tesla’s stock price tag to soar. Musk’s most recent hassle with the SEC could be his hold off in notifying regulators of his growing stake in Twitter.

Musk, right before reversing study course on the board seat, despatched out a variety of tweets in excess of the weekend referencing opportunity modifications at Twitter.

Many of them — these types of as his proposal for an ad-free of charge Twitter or turning the social media company’s San Francisco headquarters into a homeless shelter — have due to the fact been deleted.

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Musk then posted a handful of cryptic tweets late Sunday, like one showing a meme stating, “In all fairness, your honor, my shopper was in goblin method,” adopted by a single stating “Explains everything.” An additional, later on tweet was of an emoji with a hand about its mouth.

Musk has explained himself as a “free speech absolutist” and has said he does not consider Twitter is residing up to free speech concepts — an feeling shared by followers of Donald Trump and a number of other correct-wing political figures who’ve experienced their accounts suspended for violating Twitter information policies.

Twitter’s CEO and many of its board associates had publicly praised Musk last 7 days, suggesting they may possibly acquire his ideas very seriously. But the firm experienced created apparent that as a board member he could not make day-to-working day conclusions or alter policies, this kind of as overturning the Trump ban.