Activist shareholders, who we can assume Musk is in this case, generally take their bets for one of three reasons, said Anil Dash, CEO of software development startup Glitch. Either they come in to split the company in a move that Dash says wouldn’t make sense for Twitter, or to appoint a captive CEO (which Dash thinks is possible), or to pay a dividend for to get himself. The latter wouldn’t work, since Twitter isn’t making any money yet. “Musk isn’t working on any of those things, so he’s just making sure he’s privileged on the platform and then will try to bring back fascists like Trump,” Dash says.
Twitter spokesman Adrian Zamora says Twitter is committed to impartiality in developing and enforcing its policies and rules. “Our policy decisions are not determined by the board of directors or shareholders, and we do not intend to reverse any policy decisions,” said Zamora. “As always, our board of directors plays an important advisory and feedback role in all our services.” Zamora says day-to-day operations and decisions are made by Twitter’s management and employees.
The percentage of stock Musk has bought — just under 10 percent — may also hold a key. Anyone who owns more than 10 percent of any type of stock security is considered “an insider” by the Securities and Exchange Commission (SEC) and is subject to much more scrutiny. It’s a policy enforced by Section 16 of the Securities Exchange Act of 1934, and a policy the SEC is likely eager to investigate after previously slapping Musk on the pulse and accusing him of defrauding investors by tweeting that he had funding. secured to take Tesla private in 2018 and settle a lawsuit filed against him. The settlement also included a requirement that Musk must obtain approval for some tweets related to his financial activities before posting.
Still other elements of Musk’s new arrangements with Twitter — including his seat on the board — expose him to short-term gains. The deal would prevent Musk from terminating an investment within six months without giving up potential profits (when Musk announced he had bought Twitter shares, the price rose from $39.30 per share to a high of $53.84. ). But Twitter’s filing with the SEC, confirming that Musk will serve on the company’s board, also shows that he has a two-year term as director, which would stop him from pumping up Twitter stock and selling it. to dump.
There’s an interesting wrinkle in that filing: Musk can’t own more than 14.9 percent of Twitter’s stock while he’s a director of the board, and for 90 days after that — what Johnson calls “a stoppage.” He calls it a consideration that protects the company against a takeover. “The incumbent management thinks they are doing a good job and would rather not be fired. They have protected themselves against that at the price of a board seat,” Johnson said. In most cases, that wouldn’t be that expensive, but Musk isn’t like most people. “Elon Musk comes with his own headache,” Johnson says. “I can imagine they’ve thought long and hard about it.”
