Elon Musk will no longer be on Twitter’s board of directors

SAN FRANCISCO (AP) — Twitter’s biggest investor, billionaire Elon Musk, is reversing course and will join the company’s board of directors less than a week after being awarded a seat.

Twitter CEO Parag Agarwal announced the news after a weekend of Musk tweets suggesting changes to Twitter, including making the site ad-free. About 90% of Twitter’s 2021 revenue came from ads.

“Elon’s appointment to the board was to officially take effect on 4/9, but Elon shared the same morning that he would not be joining the board,” Agarwal wrote in a reposted note originally sent to Tesla employees. “I believe it is for the best.”

Agarwal did not provide any explanation for Musk’s apparent decision. He said the board understands the risks of having Musk, who is now the company’s largest shareholder, as a member. But it was recognized at the time that “Elon is treated as a subsidiary of the Company, where he, like all board members, has to act in the best interest of the company and all of our shareholders, it is the most Nice road,” he wrote.

The rapidly developing relationship between Musk and Twitter began just a week ago when regulatory filings revealed the business billionaire had acquired a 9.2% stake in the social media platform. A later financial filing revealed that Musk had been buying shares in almost daily batches since January 31.

According to a regulatory filing, Twitter gave Musk a seat on the board on the condition that he owns no more than 14.9% of the company’s outstanding stock.

Musk’s board role could make him a “thorn in management’s side” and give him an influential voice in the future of the platform, but it could also discourage him from rocking the boat too much, said Chester Spat, a finance professor at Carnegie. Said Mellon University and former chief economist at the US Securities and Exchange Commission.

“There’s an old cliché about putting someone inside a tent,” Spat said. “There were advantages to constraining him a bit.”

While Musk has been one of Twitter’s biggest critics, the sudden withdrawal from the board, which became official on Saturday, could signal that relations between Musk and Twitter will become more acrimonious.

Spat said that Musk, as the largest shareholder, could potentially “barely turn back” on Twitter executives and board members and force the company to move in a new direction.

“At some point he could oust the directors, he could replace the board,” Spat said. “He can probably launch with his current 9% stake and potentially be very successful.”

In a letter to employees announcing Musk’s departure, Agarwal wrote that “there will be distractions ahead, but our goals and priorities remain unchanged.”

Shares of Twitter Inc., which jumped nearly 30% last week after Musk’s stake went public, fell nearly 2% at the opening bell on Monday.

Musk posted some cryptic tweets late Sunday, which featured a meme saying, “In all fairness, your honor, my client was in ghost mode,” followed by one that “explains everything.” Another, later tweet, was of a hand-over-mouth emoji.

Musk’s 80.5 million Twitter followers make him one of the most popular figures on the platform, rivaling pop stars like Ariana Grande and Lady Gaga. But his prolific tweets have got him in trouble sometimes.

In one famous example, Musk apologized to a British cave explorer who alleged that the Tesla CEO angrily branded him a pedophile by referring to him as a “pedo man” and later deleted the tweet. Finder filed a defamation suit, although a Los Angeles jury later acquitted Musk.

He is also locked in a long-running dispute with the US Securities and Exchange Commission over his Twitter activity. Musk and Tesla agreed to pay $40 million in civil fines in 2018 and Musk had his tweet approved by a corporate attorney after he spoke about having the money to take Tesla private at $420 per share. tweeted. This did not happen but the tweet caused a jump in the share price of Tesla. His lawyer has argued that the SEC is infringing on Musk’s free speech rights.

Musk’s latest problem with the SEC may be his delay in notifying regulators about his growing stake in Twitter.

“He is a serial offender in relation to SEC regulations,” Spat said.

Musk sent several tweets over the weekend referencing possible changes to Twitter, before reversing course in the board seat.

Many of them – such as his proposal for an ad-free Twitter or turning the social media company’s San Francisco headquarters into a homeless shelter – have since been shelved.

Musk posted some cryptic tweets late Sunday, featuring a meme that said, “In all fairness, your honor, my client was in ghost mode,” followed by one that “explains everything.” Another, later tweet, was of a hand-over-mouth emoji.

Musk has described himself as a “free speech autocrat” and said he doesn’t think Twitter is living up to free speech principles — opinions shared by Donald Trump’s followers and many other right-wing political figures. Their accounts were suspended for violating the rules.

Twitter’s CEO and several members of its board publicly praised Musk last week, suggesting they may take his views seriously. But the company has made it clear that as a board member it cannot make day-to-day decisions or changes in policies, such as reversing the Trump ban.

Agarwal’s initial actions since taking over from co-founder Jack Dorsey in November have included restructuring divisions without major changes. The company has long lagged behind its social media rivals and claims to have very few users.

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