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Specter Of Elon Musk—And His Wishy-Washy Buyout—Loom Over Twitter’s Shareholder Meeting

by admin
May 26, 2022
in Social Media
Specter Of Elon Musk—And His Wishy-Washy Buyout—Loom Over Twitter’s Shareholder Meeting


Elon Musk is the founder and CEO of SpaceX.

AFP via Getty Images

Elon Musk didn’t speak at Wednesday’s annual meeting of Twitter shareholders, and he didn’t say anything about it on Twitter. The man still seemed to be a huge presence throughout the day. The musk of Musk—it’s a potent thing.

You could tell something was in the air from the two shareholder proposals put forward by the National Center for Public Policy Research, a conservative think tank, and the impassioned comments the center’s executives gave about the ideas.

One group asked Twitter to audit its diversity initiatives. The right-leaning group claims they have gone too far, and are now discriminating against both men and women. The other asked Twitter to publish a review into its lobbying efforts, which the center, presumably, thinks will show a liberal bias on the company’s part.

“Let’s cure the DEI mind virus spreading inside Twitter,” said a speaker from the think tank. He addressed his remarks directly to Musk and referenced Musk’s recent similar-sounding comments about a “woke mind virus.” By that, Musk means he thinks it’s foolish for companies to cave to the increased awareness around social justice over the last several years.

Shareholders rejected both proposals from the National Center for Public Policy Research, but that’s not really the point of discussing the proposals. The point is that they were allowed to attend the meeting. They weren’t on the initial agenda. These were late entries after Musk revealed his plans to takeover the company. They speak volumes about Musk’s intentions and the people he has drawn support from. He may say he’d like Twitter to act politically neutral, but there’s nothing politically neutral about the proposals put forth by the guys name-checking him. Rather, they’re deeply conservative. In the end, they’re a helpful reminder that Musk’s politics are really a quack-like-duck scenario, where their implicit meaning is the most important.

You could see Musk’s presence again when Twitter tried to get current director Egon Durban, the co-CEO of Silver Lake, reelected. Durban joined the board in 2020 after another Twitter narrowly survived a different activist investor’s interest in the company. Musk and Durban are good friends. Durban and alone was the only person Musk spoke to before his now infamous tweet about taking Tesla private in 2018; three days later, Durban turned up at Musk’s home to talk through their options about securing the funding Musk said he’d already secured.

Twitter shareholders voted against Durban’s reelection, which might suggest they’re growing a little tired of Musk and couldn’t stomach re-seating a top ally of his. They might have also voted against Durban’s reelection, which could indicate they heard ISS warn them. ISS is a research firm whose reports frequently influence shareholder meeting outcomes. ISS told shareholders to reject Durban, not due to his Musk connections. Instead, ISS based its case around the fact that Durban’s a busy guy. He sits on five corporate boards—Dell, Intelsat, Motorola, WME and Twitter—which means Twitter at most receives only divided attention from Durban, who is also, of course, managing the investment operations behind $79 billion-in-assets Silver Lake. Many things going on! With all the happenings at Twitter alone, perhaps the shareholders were wise to make the smart call.

And you could see Musk again plainly in the shareholders’ decision to reject a proposal to change the structure of Twitter’s board, one the company supported. As Twitter’s governance currently works, the directors serve staggered terms. What this means is an outside investor (like a Musk) can’t sweep into town and replace the board in one fell swoop, since only a few directors stand for election each year. In some cases, each director is eligible to run for office every year. Musk, an outside investor would need to wait for the full restocking of the board. You might read Twitter shareholders’ decision to quash this motion as a signal they’re done with Musk and are losing interest in his bid. At the very least, it indicates they’re not interested an action that’s a little like removing the deadbolt from a front door. Easy that way to enter—easier for Musk (or someone like him in the future) to push a takeover bid through.

(Now, very quickly, here’s what shareholders did approve at the meeting: two proposals that will require Twitter to document how its uses concealment clauses, a tactic to silence departing employees, and semiannual reports about how its corporate funds might influence elections. Both measures were opposed by the company.

Formally, CEO Parag Agrawal and the other Twitter executives declined to talk about Musk or the deal, which Musk has said is now “on hold” over concerns Twitter misstated estimates about spam accounts. Fat chance they were getting through the meeting’s question-and-answer section without getting asked something, though. And sure enough, one investor, innocuously enough, asked what happens to a public shareholder’s stock in a company when it is bought and taken private. Nope! Twitter executives denied that they were able to talk about this. (It’s not a hard answer to give. The shareholder wouldn’t own them anymore. If Musk’s buyout happened, they’d get a check for $54.20 a share in the mail. …Unless they’re a big, big shareholder, like, say, a Prince Alwaleed. Musk would let them keep those shares, as he is looking for more big investors who will join him in the crazy takeover. This will reduce how much his Tesla fortune becomes tied to it.

Sometime in the future, we may go through this exercise again with Twitter calling another meeting for investors to vote on Musk’s buyout. (Officially, this’ll be termed a “special shareholder meeting,” since the company certainly does not want to make buyout proposals into an annual thing.) This assumes that neither Musk nor Twitter will try to sabotage the deal. But if they don’t, and we do get another shareholder meeting, Musk won’t be some hovering shadow then. He’ll be the main event.





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