Elon Musk, now Twitter’s largest shareholder, has rejected an offer to join the platform’s board of directors after initially accepting, fueling speculation that he will continue to buy shares of the company in order to take more aggressive action to loosen the platform’s content moderation policies.
“Elon Musk has decided not to join our board,” Twitter CEO Parag Agrawal confirmed in a statement Sunday night.
“We announced on Tuesday that Elon would be appointed to the Board contingent on a background check and formal acceptance. Elon’s appointment to the board was to become officially effective 4/9, but Elon shared that same morning that he will no longer be joining the board,” Agrawal said. “I believe this is for the best. We have and will always value input from our shareholders whether they are on the Board or not.”
The Tesla and SpaceX CEO became Twitter’s largest shareholder last week when he bought a 9.2-percent stake in the company, valued at $2.9 billion. As a member of Twitter’s board, Musk would be barred from buying more than 15 percent of the company. His refusal to join the board has prompted speculation that he plans to buy a larger stake in the company and leverage it to bend the company’s content-moderation policies in a more liberal direction.
“Hostile takeover inbound,” Austen Allred, CEO Bloom Institute of Technology, wrote on Twitter. “My read of this: (I’m guessing). 1. Twitter board wakes up to realize Elon owns 9% of the company. There’s a path to him taking over. 2. Offers a board seat contingent upon him not buying too many shares. Try to contain. 3. Negotiations break down on term details. 4. ???”
“Elon joining Twitter’s board was contingent on him agreeing not to buy more than 15% of Twitter. Now he’s not joining the board. So does that mean he can he buy as much of Twitter’s outstanding stock as he wants?” wrote Peter Sterne, managing editor of New York Focus.
Agrawal mentioned in his statement that the other members of the board were eager to incorporate Musk as a “fiduciary of the company where he, like all board members, has to act in the best interests of the company and all our shareholders.”
Twitter’s board of directors is structured in a fashion that’s designed to prevent hostile takeovers.
The “staggered” system which Twitter operates under means only a few seats on its board of twelve directors are opened up to election at any given time, with those spots divided into “classes” that hold elections in different years to avoid an activist director replacing the majority of the seats. Musk was poised to be onboarded as a Class II director before he backtracked.
Musk’s decision to buy a significant chunk of Twitter came in the wake of the company’s temporary suspension of satire site the Babylon Bee for allegedly violating its “hateful conduct” policy. The Bee was locked out after it circulated one of its comedic headlines on Twitter, an intentional political joke, that named transgender woman U.S. Assistant Secretary for Health Rachel Levine “Man of the Year.”
Four days after the Bee landed itself in Twitter jail, where it has remained for about three weeks, Musk conducted a Twitter poll on March 25 asking followers whether the platform promotes free speech.
“Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?” Musk, who has been vocal about his free speech absolutist views, asked. “The consequences of this poll will be important. Please vote carefully.”
In a series of follow-up tweets on March 26, Musk asked: “Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy. What should be done? Is a new platform needed?”
Musk’s public surveys suggested that he would take matters into his own hands to either create an alternative social media space committed to upholding free speech or to use his market power, as the world’s richest man worth $273 billion, to convert Twitter into such a space.