Last week Elon Musk announced the purchase of a 9.2% stake in Twitter. The 73.5 million shares made Tesla’s CEO the largest individual shareholder of this social network. However, today, Musk announced that he would not join Twitter’s board as was expected.
According to his tweet Sunday night, Twitter CEO Parag Agrawal said, “Elon’s appointment to the board was to become officially effective 4/9, but Elon shared that same morning that he will no longer be joining the board.” His tweet continued, “I believe this is for the best. We have and will always value input from our shareholders, whether they are on our board or not. Elon is our biggest shareholder, and we will remain open to his input.”
The SpaceX founder was set to join the board for the term ending in 2024. Both Twitter’s leadership and Musk were excited about the latter’s addition to the board. In fact, on Tuesday, Musk tweeted that he was “looking forward to working with Parag & Twitter board to make significant improvements on Twitter in coming months!”
On the other hand, Twitter founder Jack Dorsey said that Agrawal and Musk will make “an incredible team.” The announcement of this purchase caused Twitter’s stock to surge by 26%.
Part of the agreement for Musk to join Twitter’s board was the commitment not to increase his stake by over 14.9% during his term. According to some experts, this decision was to rein on Musk’s influence over this social media platform. However, his decision not to join the board leaves the door for Tesla’s CEO to take a more aggressive stance, such as purchasing more shares.
Referring to this reversal, Twitter’s CEO said that the board had “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 board and all our shareholders, was the best path forward.”
But because corporate board members usually share their recommendations about the company privately, Musk would have had to limit his tweets about the social media platform. The decision not to join the board came after he tweeted severally about Twitter, including his suggestion to remove W from Twitter. In the second tweet, Musk asked if the platform was “dying” since some of the most-followed accounts on Twitter don’t tweet regularly. Such tweets after joining the board could have strained Musk and Twitter’s relationship because this shareholder has taken a hostile stance towards the platform because he has frequently accused it of not allowing free speech.