As Elon Musk is joining Twitter, CEO Parag Agrawal said that the American billionaire would “bring great value to the board.”
Elon Musk will soon become a member of the board of directors at Twitter (NYSE: TWTR), according to a filing with the SEC. The social media company announced its decision after the Tesla CEO acquired 9.2% of Twitter’s shares, becoming the largest shareholder in the company.
Following the news of Musk’s acquisition, Twitter shares soared 27% at the close of trade on Monday, gaining 5% more on Tuesday. Twitter stock has soared 30.72% in the last five days.
Elon Musk Is Joining Twitter
As Elon Musk is joining Twitter, CEO Parag Agrawal said that the American billionaire would “bring great value to the board.” Twitter co-founder Jack Dorsey welcomed the news saying Musk “cares deeply about our world and Twitter’s role in it,” adding that “Parag and Musk both lead with their hearts and they will be an incredible team.”
Musk has been a critic of the social media platform, criticizing it for introducing NFTs instead of tackling spamming and scams on its app. Despite that, Twitter is inherent to Elon Musk’s brand. He has used the app in collating Tesla’s (NASDAQ: TSLA) data, shares, and information from his fans. A lot of Twitter users have also criticized the CEO on several occasions. One was when the news of Tesla’s decision to go private resulted in a lawsuit with the SEC came to light. In Agrawal’s opinion, Musk’s beliefs and intense criticism make him an ideal addition to the company’s board.
The company disclosed in the regulatory SEC filing that the terms of appointment are valid through 2024. One of the terms requires Elon Musk not to acquire over 14.9% of Twitter shares while on the board. The condition also binds Musk till three months after his appointment expires. He is also restricted from leveraging purposes of economic exposure through derivative securities, swaps, or hedging transactions. During his service at Twitter, Elon Musk will act as a Class II director.
Musk Reacts Appointment’s Appointment
Commenting on the news, Elon Musk said that he looks forward to working with Twitter CEO Parag Agrawal and the entire board. The tech billionaire will work with the Twitter team to “make significant improvements to Twitter” over time. Currently, Musk is yet to specify the “significant improvements” he is planning for Twitter. However, he has recently been insistent on his suggestion about Twitter not allowing free speech. Elon Musk’s addition to the board of directors does not necessarily translate to him making or changing the existing policies. Also, it may be too early to determine his impact on the board. Twitter spokesperson Adrian Zamora stated that Musk will still be subject to Twitter’s rules and engagement guidelines. In his words, “Our policy decisions are not determined by the board or shareholders.”
Twitter’s classified board system places directors on intersecting terms. This is in order to avoid a newly-appointed board member gaining immediate control of the company. The classification also limits the board members to be up for re-election in any given year.
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