Twitter Inc said on Tuesday (local time) it will offer Tesla boss and entrepreneur Elon Musk a seat on its board of directors, a position he plans to use to bring about significant improvements at the social media site.
The move came after Musk disclosed in a regulatory filing on Monday that he had amassed a 9.2 percent stake in Twitter, making him its largest shareholder.
Beyond the promise of big change, Tesla Inc's CEO, who often chooses unconventional paths, has provided little detail.
Even so, Musk will be involved in strategic decisions, including the direction of Twitter's Bluesky project and the addition of an edit button, according to a source familiar with the situation.
He will not have a say on the platform's moderation, what speech gets banned or whose accounts get restored, the source said - a policy that applies to all board members.
Twitter shares were up more than 4 percent in midday trading, after closing up over 27 percent on Monday.
Musk's appointment, however, will potentially block chances of a takeover bid because the billionaire cannot own more than 14.9 percent of Twitter's stock either as an individual shareholder or as a member of a group as long as he is on the company's board.
The disclosure of his stake on Monday stoked widespread speculation that varied from a full takeover of the platform to taking an active position.
Musk has not indicated an interest in acquiring the company, the source said.
TWITTER CEO 'EXCITED'
Twitter executives tweeted out congratulations after the announcement. There is hope that his presence can revive the platform that has struggled to attract users and possibly stir interest from retail investors.
"I'm excited to share that we're appointing @elonmusk to our board," Twitter CEO Parag Agrawal said in a tweet. "He's both a passionate believer and intense critic of the service which is exactly what we need on @Twitter, and in the boardroom, to make us stronger in the long-term."
In response, Musk tweeted: "Looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months."
Musk reached out to Twitter co-founder Jack Dorsey and CEO Agrawal shortly after he built his stake on March 14, telling them he wanted to join the board, according to a source familiar with the situation.
They were eager to bring him on board, believing he could bring buzz to the platform as well as good ideas, the source said.
Bluesky is a company funded by Twitter to develop a new operating standard for social media. The company is working on building an open protocol that would allow different social media companies to operate together.
Musk, who calls himself a free-speech absolutist, has been critical of the social media platform and its policies, and recently ran a Twitter poll asking users if they believed the platform adheres to the principle of free speech.
After disclosing his stake on Monday, Musk put out another poll on Twitter asking users if they want an edit button, a long-awaited feature on which the social media platform has been working.
NERVOUSNESS
"News that he is taking a board position will lead to expectations that he wants, and will have, greater involvement in decision making at the social network," said Susannah Streeter, senior analyst at Hargreaves Lansdown.
"This may lead to some nervousness about Mr Musk getting too much influence about the way Twitter is run, with a view to bolstering his own personal brand and that of his companies."
Musk, a prolific user of Twitter, has made a number of announcements to his over 80 million followers on the social media platform. read more
His board term expires at Twitter's 2024 annual meeting of stockholders, the company said.
The world's richest man will also be a board member of Endeavor Group Holdings Inc, owner of the Ultimate Fighting Championship, until June 30. In 2018 he exited the board of tech nonprofit OpenAI, which he cofounded.
His new role as a board member at Twitter could be a further distraction from work at Tesla. He is also the founder and CEO of SpaceX, and leads brain-chip startup Neuralink and tunneling venture the Boring Company.
He said in January that Tesla will not launch a $25,000 electric car, saying "we have ... too much on our plate, frankly." Tesla needs to ramp up production at its new factories in Berlin and Texas and boost production at its existing ones despite supply-chain disruptions.
Reuters
