Elon Musk, the world’s richest man and Twitter’s largest shareholder has turned down the opportunity to join the board of the company. This news was announced by Twitter’s Chief Executive Parag Agrawal, crushing any hopes of Musk becoming a part of management.
Agrawal’s tweeted a statement that said that Twitter had announced that Musk would join the board upon formal and background acceptance. The statement further said that Musk’s appointment was to become effective 4/9, but Musk cleared the air the same morning by saying that he will not join the company’s board.
Elon Musk’s impulsive decision to decline a seat on the board is a notable U-turn just a few days after he became Twitter’s biggest shareholder. At this stage, Musk has not disclosed why he does not want a seat among the company’s core decision-makers.
Musk’s decision has however sparked speculation, hinting that he might be looking to buy a bigger state in the company.
What could have triggered Musk’s decision to decline a seat on the board?
The deal to add Musk to the company’s board was created when he acquired around 9% of the company’s stake becoming its largest individual shareholder.
Filings in the U.S. Securities and Exchange Commission suggested that the seat was reserved for Musk after coming to an agreement with him to keep his stakes below 15%.
However, as things stand, it is unclear what transpired in the interim for the deal to fall apart. A range of factors could have led to this decision.
Internally, Twitter’s employees could be apprehensive about Musk’s appointment who has used Twitter to call people names, promote fringe cryptocurrency projects, and also get in the wrong books of the SEC.
Besides, Musk has also dished out a series of tweets criticizing the company. This could have raised several questions about how ready Musk was to keep his grievances and impulses aside for the interest of the company.
Will Musk sell his stake in the company or double down?
With so much going on, there are several theories making the rounds.
Despite the fact that there is very little indication that Musk intends to do this, he could sell off his stakes in the company completely.
Getting directly involved in the board may have already added fuel to Musk’s ongoing conflict with the SEC. Declining the seat on the board at the moment saves him the headache from the SEC and gives him more time to focus on the companies he’s built including SpaceX and Tesla.
Another possibility is that after declining a seat on the board, Musk could acquire additional stocks of Common Stock on Twitter, leaving the path open to exceeding the 15% ownership stake cap which would have been active if he was a board member.
Time will tell what exactly will go down the line in the coming weeks. In the meanwhile, you can leave your thoughts and tell us why you think Musk turned down a seat on the board?