Twitter is looking to appoint Elon Musk as a “Class II director” to its board

Elon Musk, the CEO of Tesla, will be joining the board of directors at Twitter. This was confirmed after a filing with the United States Securities and Exchange Commission was released. Musk will hold the position of class II director until 2024. As explained in an article published on Investopedia, positions like these can be used to thwart an acquisition.

A second confirmation of Musk’s appointment was by CEO Parag Agrawal of Twitter, who claims it became clear to the company that he (Elon Musk) would bring great value to the Board. “He’s both a passionate believer and intense critic of the service”, Agrawal notes, “which is exactly what we need on Twitter, and in the boardroom, to make us stronger in the long-term. Welcome, Elon!” “I look forward to making significant improvements to Twitter in the coming months!” Musk responded.

Twitter’s letter of agreement with Musk provides that, “The Company will appoint Mr Musk to the Company’s Board of Directors (the “Board”) to serve as a Class II director with a term expiring at the Company’s 2024 Annual Meeting of Stockholders.” This means that, For so long as Mr Musk is serving on the Board and for 90 days thereafter, Mr Musk will not, either alone or as a member of a group, become the beneficial owner of more than 14.9% of the Company’s common stock outstanding at such time, including for these purposes economic exposure through derivative securities, swaps, or hedging transactions.

Musk said on April 4th that he had bought a 9.2% stake in Twitter, despite his concerns about free speech on the platform. As a result of Musk’s purchase, he is now the company’s largest individual stakeholder. Shortly after he made that revelation, Musk conducted a survey of his followers to see if they wanted an “edit” button added. In response, Agrawal tweeted that “the consequences of this poll will be important” and urged people to “vote carefully.”

Former Twitter CEO Jack Dorsey stated that he is “happy” that Musk has joined the Twitter board, stating that “he cares deeply about our world and Twitter’s role in it.” Despite his resignation as CEO in November 2021, Dorsey will remain on the board of directors until some point in May 2022.

Musk’s stake may cause more SEC concerns, CNBC notes. Anyone who owns more than 5% of a corporation must notify the SEC within 10 days of their purchase. Musk bought the stock on March 14th, 2022, but didn’t announce it until April 4th, 2022, 21 days later. The SEC’s penalty for this type of breach is normally approximately $100,000, according to CNBC.

The Securities and Exchange Commission has often clashed with Tesla CEO Elon Musk over his tweets. As of 2018, the SEC was suing Musk for tweeting that he had “funding secured” for the privatization of Tesla. A judge eventually ordered an attorney to review and approve all of Musk’s tweets before they are posted. The Securities and Exchange Commission (SEC) is now looking into Musk’s tweet asking for user input on whether he should sell 10% of his Tesla stock.