Twitter has appointed Tesla CEO Elon Musk to its board of directors, according to a report filed by the US Securities and Exchange Commission. Musk will serve as a second-rate exit until 2024. This is a type of position that can be used as a countermeasure to takeover.
in a pair of tweetTwitter CEO Parag Agrawal confirmed Musk’s new role on the board. He described Musk as a “passionate believer and fierce critic of service” and said he would “bring great value to our board of directors.” musk replied via Twitter saying he looks forward to “make big improvements to Twitter in the coming months!”
“The Company will appoint Mr. Musk to the Company’s Board of Directors (the “Board”) to serve as a second-tier manager with the expiration of his term of office at the Company’s 2024 Annual Shareholders’ Meeting,” the filing says. “As long as Mr. Musk is on the Board and for a period of 90 days thereafter, Mr. Musk will not, either alone or as a member of a group, become the beneficial owner of more than 14.9% of the Company’s common stock at that time, including for these purposes economic exposure through Derivatives, swaps, or hedging transactions.”
On Monday, Musk announced via a SEC filing that he had bought a 9.2 percent stake in Twitter, despite his complaints about free speech on the platform. Musk’s acquisition made him the company’s largest single shareholder. Shortly after this revelation was made, Musk conducted a follower poll about creating an Edit button. Agrawal Reply to Tweet “The results of this survey will be important,” he cautioned users to “vote carefully.”
We look forward to working with the Parag & Twitter board to make major improvements to Twitter in the coming months!
– Elon Musk April 5 2022
Jack Dorsey, the former CEO of Twitter, expressed his delight at Musk’s joining Twitter’s board of directors, noting that he “deeply cares about our world and Twitter’s role in it.” Dorsey stepped down as CEO in November 2021 but will remain on the board until sometime in May.
I’m really happy to have Elon join the Twitter board! He cares deeply about our world and the role of Twitter in it.
Both Parag and Elon lead with their hearts, and they’d be a great team. https://t.co/T4rWEJFAes
– Jack (@jack) April 5 2022
As CNBC noted, Musk’s investment could lead to more problems with the SEC. The Securities and Exchange Commission requires anyone with more than 5 percent of the stock in a company to disclose their purchase within 10 days. Musk first acquired the shares on March 14, 2022, and did not disclose this information until April 4, 2022 – 21 days after the incident. According to CNBC, SEC fines for this type of violation are typically not heavy (for the world’s richest man at least), and tend to fall around the $100,000 mark.
Another issue could have to do with the way he announced his stock purchase, keeping schedule 13G instead of choosing the more complicated 13D. The difference is that anyone who acquires more than 5 percent of a company’s stock is required to register it, and according to Investopedia, Form 13D includes asking about plans “that involve a merger, reorganization, or liquidation of the issuer or any of its subsidiaries.” The simpler 13G model does not ask these questions. It is intended for use when “investors have no intention of affecting the issuer’s control,” and holding a seat on the board indicates that this is not the case. Submitting forms incorrectly may result in a fine from the Securities and Exchange Commission (SEC).
Musk has headed the Securities and Exchange Commission multiple times due to the content of his tweets. In 2018, the Securities and Exchange Commission (SEC) sued Musk for posting on Twitter that he had secured “secured funding” to make Tesla private. A judge later ordered the lawyer to approve Musk’s tweets before he posted them. The Securities and Exchange Commission (SEC) is currently investigating Musk over his tweet that polled users about selling 10 percent of his Tesla stock.
Update April 5th 10:17AM ET: Added information regarding Musk’s SEC file.