Elon Musk, the billionaire owner of Tesla and the largest shareholder of social media company, Twitter, has decided not to join the Twitter board of directors, despite owning significant holdings in the social media giant.
This is despite the recent suggestion that he could be joining the company’s board after purchasing 9.2% stake in Twitter last week, which had earned him a place in the company board. However, the decision appears to be last minute as the billionaire had been hinting on his readiness to join the board using his tweets and memes.
The billionaire posted a meme 4 days ago on the 7th of April showing him holding marijuana at a podcast he attended with the caption, “ Twitter’s next board meeting is gonna be lit.” Analysts had seen this as an indication that at the time the meme was posted he was going to be on the Twitter board.
What Twitter CEO is saying about Musk’s decline to join the board
Parag Agrawal, CEO of Twitter shared a tweet this morning with the caption “Elon has decided not to join our board. I sent a brief note to the company, sharing with you all here”.
In the tweet, there was an image that looked like a draft or a copy of an email that had been sent out.
It read; Team, Elon Musk has decided not to join our board. Here’s what I can share about what happened.
The Board and I had many discussions about Elon joining the board, and with Elon directly. We were excited to collaborate and clear about the risks. We also believed that having Elon 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, was the best path forward. The board offered him a seat.
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. I believe
This is for the best. We have and will always value input from our shareholders whether they are on our Board or not. Elon is our biggest shareholder and we will remain open to his input.
There will be distractions ahead, but our goals and priorities remain unchanged. The decisions we make and how we execute is in our hands, no one else’s. Let’s tune out the noise, and stay focused on the work and what we’re building.
What we think happened
- To begin with, the company requires its board members to act in a fiduciary capacity.
- Who is a fiduciary? A fiduciary is a person or organization that acts on behalf of another person or persons, putting their interests ahead of their own and being bound both legally and ethically to act in their best interests.
- Twitter expects its board members to act in fiduciary capacity, this means that if Elon were to be a board member he would be bound to act in the best interest of the company. Putting the interest of the company before his own.
- Observing the personality of the billionaire, we can see how this may be difficult for him to do as he clearly likes to air his views and express his opinions, especially through his tweets. Being a board member would restrict him from posting some of the tweets he would like. He may even have his tweets subjected to vetting before he sends them out. We can see how that would be very difficult for the billionaire.
- Another thing we got from the statement was the required background check. Most corporations especially multi-billion dollar corporations like Twitter need to run background checks on their board members for various reasons, one of which is to avoid any surprises as board members are vital to the decision making of these corporations and it is safe to be aware of who exactly a board member is.
- There are no situations that suggested that the billionaire objects to a background check, however, analysts are of the opinion that a billionaire would ordinarily object to scrutiny on their activities.
- However whether or not these are enough reasons or if they are the sole reasons for the billionaire’s decision not to join the board, time will tell.