Tesla CEO Elon Musk last week said he doesn’t think Twitter’s board of directors shares the same financial interests as the social media platform’s investors.
“With Jack [Dorsey] departing, the Twitter board collectively owns almost no shares,” Musk said in a tweet, replying to a shareholding breakdown of each of the members of Twitter’s board.
“Objectively, their economic interests are simply not aligned with shareholders.”
Wow, with Jack departing, the Twitter board collectively owns almost no shares! Objectively, their economic interests are simply not aligned with shareholders.
— Elon Musk (@elonmusk) April 16, 2022
Dorsey, the co-founder and former CEO of Twitter, is also a member of the board and owns about 2.4% of the company. All the remaining members of the board, combined, only own a little over 0.2% of Twitter.
Musk last week made a formal offer to purchase Twitter for $43 billion USD in cash after buying a 9.2% stake in the social media giant to become its largest shareholder earlier in the month. The Tesla CEO was originally invited to join Twitter’s board of directors, but he instead set his sights on acquiring the company outright.
Compared to Twitter, Tesla’s board of directors has a much greater stake in the company. Musk, who also sits on Tesla’s board, owns a big fat 23.5% chunk of the electric vehicle (EV) maker (17% common shares, and options that would boost his ownership to over 23.5% when exercised), while all other members together represent about 1.8% of the company’s shareholding.
Looking at the board of directors’ ownership stakes in several major large-cap tech companies, including Meta Platforms (formerly Facebook), Apple, and PayPal Holdings, it is not necessarily unusual for the members of a company’s board to not own a sizeable piece of it.
However, that doesn’t invalidate Musk’s point either — given the little financial interest they have in the company, Twitter’s directors are not inclined to share the same economic interests as the company’s investors.
Essentially, 0.2% of Twitter’s ownership (excluding Dorsey) has the authority to accept or decline Musk’s $43 billion offer. That could make striking a deal more difficult for Musk, given his strategy was to simply bid a good margin above what Twitter shares are trading for.
Musk on Friday posted a poll on his Twitter asking if people thought deciding to sell Twitter should be up to the company’s shareholders and not its board of directors.
Taking Twitter private at $54.20 should be up to shareholders, not the board
— Elon Musk (@elonmusk) April 14, 2022
