The world’s richest person could now power the direction of a leading social media platform with a large stake and a position on the Board of Directors.
What Happened: On Monday, it was revealed Tesla Inc TSLA CEO Elon Musk owns a 9.2% stake in shares of Twitter Inc TWTR. The stake makes Musk the largest shareholder in the company.
Musk has now been appointed to Twitter’s Board of Directors, according to an 8-K filing on Tuesday. He will serve as a Class 2 Director with a term expiring at the 2024 Annual Meeting of Shareholders.
Twitter CEO Parag Agrawal shared the news with a tweet.
“I’m excited to share that we’re appointing @elonmusk to the board! Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board. He’s both a passionate believe and intense critic of the service, which is exactly what we need on @twitter, and in the boardroom, to make us stronger in the long-term. Welcome Elon!” Agrawal said.
Why It’s Important: One of the items declared in the filing could influence what Musk does with his Twitter stake. Many had hoped Musk would accumulate additional shares and take a larger stake.
Under the terms of the agreement, Musk can't be a beneficial owner of more than 14.9% of Twitter shares while serving on the Board of Directors or 90 days after.
One of the first items conducted by Musk after it was announced he was the largest shareholder was polling Twitter users to see if they want an edit button, a long-requested feature. Over 73% of respondents have answered yes. Agrawal tweeted that the "consequences of this poll will be important," which could suggest a change can be made.
Twitter is expected to report quarterly earnings in April and will hold its annual meeting of shareholders on May 25. These events could offer more of an explanation to what Musk could have in store for the company.
"Looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months!" Musk said in a reply tweet to Agrawal.
TWTR Price Action: Twitter shares surged 27% to close Monday at $49.97. Shares are up 6% to $53.13 on Tuesday in pre-market trading.
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