As Elon Musk, CEO of SpaceX and Tesla, is seeking to buy Twitter, he announced that if his bid succeeds and he takes over ownership of the social media giant, board members will not be paid anything.
“Board salary will be $0 if my bid succeeds, so that’s ~$3M/year saved right there,” Musk wrote in a Twitter post Monday.
This comes in the midst of Musk’s fight to acquire Twitter after buying the largest single share of the company.
Currently, Twitter spends about $2.9 million in cash and stock awards to board members, according to an SEC filing reported by CNBC News.
Musk launched his effort to purchase Twitter after turning down a position on Twitter’s board since it came with the stipulation that he would have to cap out his shareholding at 14.9 percent, PBS News reported.
Musk instead offered to buy Twitter for $43 billion and take it private.
In response, Twitter has adopted a limited shareholder rights plan, what is known as a “poison pill.”
This plan is an effort to fend off Musk’s hostile takeover by allowing existing shareholders to buy additional, discounted shares. This then dilutes the ownership interest of the hostile party (Musk in this case), Bloomberg reported.
Poison pills are the plans that companies adopt if they are trying to ward off activist investors or a takeover from someone wanting to drastically change the company (hence, the term “hostile takeover”).
As has already been clear seen, Musk is ready to make lots of changes to Twitter if he takes over, which now includes not compensating board members.
When he first bought his large share he began floating ideas for change, such as a potential “edit” button, and asking his Twitter followers in a poll if they thought the platform was committed enough to the principles of free speech.
“My strong, intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” he said during an onstage interview at a TED2020 event on Thursday, according to The Hill. “I don’t care about the economics at all.”
He even suggested turning the Twitter headquarters into a homeless shelter, Business Insider reported.
Now, with him taking steps towards total ownership of Twitter, he is making more suggestions.
“The outspoken executive has argued Twitter needs to be ‘transformed’ into a private company so it can become a forum for free speech. He’s also said that Twitter’s board members’ interests ‘are simply not aligned with shareholders’ and that the board ‘owns almost no shares’ of the company,” CNBC News reported.
As Twitter moves towards the plan of the “poison pill,” the future of the company is uncertain.
Musk could try to fight the poison pill measures in court, but as Columbia University law professor John Coffee told PBS NewsHour that “no court has overturned a poison pill in the last 30 years.”
However, Twitter is looking at trouble either way because, while the poison pill option is a predictable defense mechanism for this kind of situation, Wall Street could see it as a “sign of weakness,” Daniel Ives, an analyst for Wedbush Securities, told PBS.
This is also a dangerous position for the platform.
Reporting from The Western Journal.
