On Sunday, Twitter notified employees and shareholders that its largest shareholder, Elon Musk, will not be joining the social media giant’s Board.
Last week, along with filings with the SEC, it was reported that Musk would join the Board of Twitter, subject to a background check.
Parag Agrawal, Twitter’s CEO, made the announcement in a post on the platform.
I’m excited to share that we’re appointing @elonmusk to our board! Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board.
— Parag Agrawal (@paraga) April 5, 2022
The SEC filing states, “The Company will appoint Mr. Musk to the Company’s Board of Directors … to serve as a Class II director with a term expiring at the company’s 2024 Annual Meeting of Stockholders.”
The filing goes on to state that Musk is not allowed to purchase more than 14.9% of the company’s common stock, limiting his ability to gain full controlling shares of the corporation.
In an SEC filing last Monday, it was confirmed that Musk purchased roughly 73.4 million shares in the company — making him the largest shareholder in Twitter. According to the Financial Times, founder Jack Dorsey only holds a 2.25% stake in Twitter.
However, on Sunday evening, a note from Agrawal to employees notified them that Musk was not going to accept his position on the company’s Board.
Elon has decided not to join our board. I sent a brief note to the company, sharing with you all here. pic.twitter.com/lfrXACavvk
— Parag Agrawal (@paraga) April 11, 2022
Musk’s Board seat was set to become official on Saturday, April 9. However, according to the statement, Musk notified the leadership he would not take the board seat.
Agrawal said, “I believe this is for the best.” He also went on to state that the company’s leadership would always “value the input of our shareholders whether that are on the Board or not.”
The Twitter CEO also said there would be “distractions ahead, but our goals and priorities remain unchanged.”
It remains to be seen what actions and influence Musk will exercise as the company’s largest shareholder. One fact to consider, Musk is no longer bound by a restriction on purchasing further equity in the social media company. According to the company’s restrictions, members of the Board may not own more than 14.9% of outstanding shares in the company. Musk will no longer be subject to this policy.