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Elon Musk Won’t Join Twitter’s Board of Directors, Amends Filing to Become Active Investor

Elon Musk Won’t Join Twitter’s Board of Directors, Amends Filing to Become Active Investor

Being on the board meant Musk could not “be the beneficial owner of more than 14.9% of the company’s common stock outstanding.” Does this mean he’ll buy more than the 9% he purchased last week?

https://www.youtube.com/watch?v=zIwLWfaAg-8

Twitter CEO Parag Agrawal announced late Sunday night that Elon Musk declined an invitation to join Twitter’s board of directors.

Musk became Twitter’s largest shareholder last week when he purchased 73.5 million shares of the company.

Love how he mentioned the background check, making it seem like Musk failed it. It’s Elon Musk. I get why Twitter has to run a background check. I’m pretty sure everyone appointed to a board of directors has to go through a background check.

Musk’s appointment should have gone into effect on April 9. On that morning, he told Twitter he would not join the board.

Restrictions to shareholding could have influenced Musk’s decision. He “cannot be the beneficial owner of more than 14.9% of the company’s common stock outstanding” the entire time he is on the board “or 90 days after.”

Without being on the board, I guess Musk can own as much stock in Twitter as he wants?

In his original filing, Musk chose a 13G and not a 13D, which differentiates between a passive and active investor. Via the 13G designation, he’s confirming he’s not intending to shake things up as if we’re but he still has the stake.

But Musk amended his filing on Monday. He made it known that “he owns the stake for investment purposes and that he might acquire more shares or sell his current holdings in the company.”

The Wall Street Journal reported that Musk “might engage with the social-media company on a range of issues ‘without limitation.'” The amended filing states he “doesn’t have any plans or intentions to change his holdings in the company” but he has the right to change his mind “at any time.”

Those issues include Twitter’s “product and services, potential mergers and governance issues.”

Liberal Twitter employees exploded when news broke about Musk buying a 9% stake in the company. From Reuters:

Longer term, employees said Musk’s involvement may change Twitter’s corporate culture, which they say currently values inclusivity. Musk has faced widespread criticism for posting memes that mocked transgender people and efforts to stem the spread of COVID-19, and for comparing some world leaders to Hitler.

Several employees were alarmed by the warm welcome Musk received from Twitter CEO Parag Agrawal and cofounder Jack Dorsey, which prompted them to hit the job market this week.

“Some people are dusting off their resumes,” one person said. “I don’t want to work for somebody (like Musk).”

Keeping an eye on Musk’s Twitter account!

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Comments

The Gentle Grizzly | April 11, 2022 at 9:15 am

It’s “invitation”, not “invite”. Don’t noun verbs.

-signed- the grammar nazi

Good! Liberal employees exploded when they heard…Good. “We were excited to collaborate and…” Right. About as excited as a homeowner seeing a turd in his new swimming pool. Elon need not bother with the board seat. But the board and others know he is in ‘over watch’.

The key sentence in that statement from Parag is the one where he states that by joining the board Musk would have a duty to ALL shareholders.

Translation: If we tell you to shut up and you don’t, you can be sued and possibly sanctioned by our Deep State buds at the SEC.

One of the conditions of joining the board was that Musk would not buy more stock and consolidate his control. I guess that is no longer a limitation.

So Musk tested the waters by buying 9% and getting appointed to the board and on the cheap. He still had the threat of buying another 5 1/2% but that apparently didn’t give him enough clout to motivate management to make the changes needed to get Twitter cleaned up.

So instead of buying the rest of his allowed position, he opts to leave the board to greatly enlarge the threat from 14 1/2% to maybe 50+. And if the stock sells off on this news, Musk can go in and buy even more shares on the cheap, maybe build it to 14 1/2% in two or three moves. This could clarify the threat to the board and place Musk in the position of making demands , like restoring Trump’s access. Musk is the proverbial cat batting a mouse around before eating it.

Stock is down about 2% pre-market.

    healthguyfsu in reply to Pasadena Phil. | April 11, 2022 at 9:45 am

    No way he is going to buy 50+

    He might, however, encourage like-minded individuals to buy in kind.

      CommoChief in reply to healthguyfsu. | April 11, 2022 at 10:09 am

      I agree. He doesn’t need 50% to make an impact, his current 9% stake has already done that. He and other reformers can accumulate shares and submit items for shareholders to vote on. Not being on the board allows more flexibility.

        I don’t think so. Musk was driving the price of the stock up just by buying his first stake. The 14 1/2% ceiling for board members limited the threat and because all shareholders benefited from the huge rebound of their depressed shares, the only risk he faces is if the SEC decides that he failed to notify them that his position had exceeded 5% on a timely basis. But he is now free to launch a hostile takeover which would send the stock price soaring.

        Musk can afford to become majority shareholder largely from the profits of his current shares and the appreciation of the new shares. He is playing poker sitting behind a huge stack of chips at a table populated by weak players.

        The board of directors is required by law to entertain all takeover bids. Regardless of whether the bid is hostile to the board, if it is the most beneficial for all shareholders, they would have to accept the offer. Or negotiate to meet Musk’s demands. Musk would have a clear path to sell his shares which would crush the stock. Musk could then donate the profits from selling his shares to some worthy cause and avoid paying taxes. The board MUST relent.

        I wonder if that is why Jack Dorsey stepped down the way he did. He wants out completely? Might we see the entire board resign?

    Gosport in reply to Pasadena Phil. | April 11, 2022 at 9:52 am

    Musk could be positioning for a hostile takeover. Somebody get him Carl Icahn’s number.

    Peabody in reply to Pasadena Phil. | April 11, 2022 at 10:57 am

    “Musk is the proverbial cat batting a mouse around before eating it.”

    Reminds me of Obama being invited to the White House last week. It was pitiful. Biden looked like a lost little mouse. And Obama just ate him up.

      henrybowman in reply to Peabody. | April 11, 2022 at 5:09 pm

      My first thought was, “Musk cleverly ‘entertained’ the offer of a board seat just long enough to flush out the wokest snowflakes into fleeing.” But then I had to wonder if the snowflakes might ultimately feel more threatened by Musk as an 800-lb. stockholder than as a director.

      I saw it a bit differently: notice there was just a bunch of women around having a kaffeeklatsch. Obama was just the one who showed up last

      Any male would have felt out of place.

    Lucifer Morningstar in reply to Pasadena Phil. | April 11, 2022 at 11:01 am

    So instead of buying the rest of his allowed position, he opts to leave the board to greatly . . .

    No, Musk didn’t leave the board he simply declined the invitation to become a member of the Board. So he was never under any limitations as to the amount of stock he could purchase as he was never a member of the board where those limitations hold.

    And it must driving Parag Agrawal and the rest of the board members insane that their attempt to control Musk by making him a board member and thus limiting the amount of Twitter stock Musk could hold at any given time has failed.

    It’s gonna be fun to watch how this all plays out.

        Lucifer Morningstar in reply to Pasadena Phil. | April 11, 2022 at 2:24 pm

        No sir, it isn’t the “same thing”. Musk was never on the Twitter Board of Directors so to say that he “left the board” is incorrect. One cannot “leave” what one was never a member of in the first place. Musk wisely declined the invitation to become a board member that would bind him to certain rules that would not be in his favor. But he was never a member to begin with. Big difference.

          No, it doesn’t change my main point. Regardless of whether he was quit the board or turned down an offer to join the board, he is now in a position to do whatever he wants. He left one box and entered another. We aren’t writing a definitive Musk biography where we would have to nail down every single detail. You are making a distinction, accurate as it may be, makes no difference to the point I was making.

Russ from Winterset | April 11, 2022 at 10:18 am

I said in an earlier comment that the invitation to join the board was Twitter’s attempt to insure that Musk was standing inside the tent pissing out instead of standing outside pissing in. Even if he never buys another share of stock, he has put them on notice that he cannot be bought off on the cheap. So now he can use this leverage to either influence Twitter to liberalize their free speech policies, or he can try to get a payday out of the insiders who are now running scared. Either way is fine with me, since Twitter is a cesspool.

If Musk can save Twitter, great. If he can’t save it, I hope he kills it with fire and salts the earth from whence it came. Either way I will not be a participant.

If anything, the past week has proven what everybody already knew, Twitter is a sewer and the employees like it that way.

    Russ from Winterset in reply to Neo. | April 11, 2022 at 12:09 pm

    I prefer to call it a cesspool. With a sewer, the waste is being moved downstream to the treatment plant. In a cesspool, the waste just sits there festering until someone comes along with a “honey wagon” to pump it out and haul it to the plant.

    In the case of Twitter, nobody is stepping up with the honey wagon, and the pit is starting to get VERY ripe.

Twitter stock (up $0.24) has already traded about 6% of the total stock already this morning (after about one hour), so Musk could buy more easily.

First, can we call them “Communist” employees and not “liberal” ones. Like all radical leftists, they are ultra-illiberal.

Second, if they are so traumatized by this, I might point out that there are plenty of high-rise buildings in San Francisco, in case these little Commies consider seppuku to be a form of cultural appropriation.

I’m guessing that wag the dog Parag Agrawal’s job is in jeopardy.

Here’s what I can share about what happened.

This is the sentence that caught my attention.
I am sure there’s a lot more going on besides what we are being told.

    Yep! This also caught my eye:

    “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.”

Musk has been playing this fast and loose with the SEC. If he was planning a hostile takeover, he should have already filed forms to that effect. He has not done so.

But the fines for failure to file in a timely manner seem (to my layman’s eye) to be chump change for a billionaire. He may see it as an acceptable risk.

    tlcomm2 in reply to irv. | April 11, 2022 at 1:11 pm

    One of the advantages of having a history of being mercurial is that Elon can plausibly claim he simply changed his mind and suddenly decided to buy another 10%.

    I’m not sure that is entirely accurate. I am sure there is point where Musk is obligated to divulge his intentions to engage in a hostile takeover but I don’t think buying 9% is the trip wire. It is being argued that he broke the law by not reporting reaching 5% ownership on a “timely basis”. But he did. Grey area but he is up to bigger things. For now, I think all he has to do is surpass the 14.5%.

    Besides, everyone has already seen the possibility (likelihood?) of a “hostile takeover”. The SEC is certainly paying attention. Hostile takeovers are always bloody and for another of the Masters of the Universe to jump in now will cost them big coin. And then Musk dumps his shares at a big profit leaving them holding the bag after the shares take another big dump? Nope. Don’t see it. I think Musk is in there nibbling away and will probably goose the market by announcements (SEC filings?) announcing his reaching 15% then 25% and so on and ramping up the tension as he approaches striking distance.

    This is torture if you are a wokester working for Twitter sitting a lot of restricted shares and stock options. What will the new strike price be for the next round of awarding restricted shares and stock options? How much of their wealth will evaporate, especially if the stock price plunges and wipes out most of their holdings? Especially the high-price options. Maybe all of it. Keep in mind that Twitter only recently took a big dump so how many of those stock options already under water even after the Musk spike up?

    I know how it feels to be sitting on a pile restricted company shares and stock options in your 401(k) only to be forced to watch them go to zero. Nothing you can do. All you can do is watch. That is a big part of what Musk is doing. Most Twitter employees are watching their lives flash before their eyes waiting for the guillotine blade to come down.

    Martin in reply to irv. | April 11, 2022 at 3:12 pm

    The SEC would have to read Musk’s mind to know when he decides that a hostile takeover was the move. He was acting mostly friendly up to now. I would guess that someone thought they could enforce their will on him by putting him on the board. So rather than a minority board member that can’t say anything and can’t get his way on votes of the board he may decide hostile takeover or just buy share and align with other shareholders to change the board and C-suite.

      I believe the only thing Musk has to do is to present a bona-fide offer to buy all shares to the board. They can fight it even if it is a great offer but they do have to disclose it to their shareholders. After that it usually gets ugly. I hope we get to that point. I would love to see how that ends up. For Musk, it is already clear that he brought enormous value to the shareholders just by getting involved. Rejecting the offer would be followed by the stock price crashing. I would imagine that lawyers could bring a case that the board illegally rejected a fair offer. Even the shareholders could sue the board.

2smartforlibs | April 11, 2022 at 12:40 pm

That has to scare some woketopians. WIth a buy or sell, he can change what they earn and what the stock price is worth on even places like AWS.

“….employees said Musk’s involvement may change Twitter’s corporate culture, which they say currently values inclusivity.”

Riiiiigghhhht… Stupid fucking progs, lying motherfuckers, like always.

They’ll “include” you only as long as you march in lock-step to their nazi tune. Fuck them all.

Using Twatter is like cracking open your skull and letting every prog in the world use your brain as a toilet.

Just quit that stupid shit.

    Martin in reply to Paul. | April 11, 2022 at 3:15 pm

    Very inclusive: lefties, crazies, American haters including Iran’s “Leaders” but not the Babylon Bee or Trump or …

Was the holdings limit in effect before Musk’s acquisition, or was it invented specifically to limit him and nobody else?

As for Parag Agrawal, his open letter proclaimed that he doesn’t answer to the board and neither do Twitter’s employees, so they’ll do what they want. That’s a rather arrogant, as well as legally wrong, position to take. If Musk wants to shake things up it won’t do to have a defiant CEO and a stock position that’s too small to make the board sack him and anybody else who won’t toe the line.

    Steven Brizel in reply to randian. | April 12, 2022 at 8:43 am

    Agrawal’s statement sounded as if he was confident that Musk could be coopted and brainwashed into supporting Twitter;s current raison de etre. If you have read Musk’s statements about social media and freedom of speech, that sounds like the direct opposite of Musk’s intent in buying shares of Twitter.

Steven Brizel | April 12, 2022 at 8:37 am

Free speech advocates should be rooting for Musk to buy and redirect Twitter from its current obvious mission of suppressing free speech to promoting free speech

I think Musk simply wants to make money off of Twitter. It isn’t as profitable as the other dominant Tech monopolies. Maybe he thinks he can improve its business.