In an unexpected move, Twitter has reportedly rejected the resignation of an ally of tech mogul Elon Musk from its Board of directors.
It was reported that former Australian-British media mogul, Rupert Murdoch, had tendered his resignation from the Board a few days after Musk criticized Twitter for not doing enough to combat online trolling.
The surprising move by Twitter has now caused speculation about the motives behind the rejection.
Background of the event
On June 8th, 2020, Twitter attracted widespread media attention when it refused to accept the proposed resignation of board director and close ally of CEO Elon Musk, Peter Currie.
Peter Currie joined the Board of Twitter in 2018, with the intention to remain for three years. On June 8th, 2020 Currie submitted a formal letter of resignation to his fellow board members and CEO Jack Dorsey. The news quickly spread among the tech industry as many speculated that Musk had strongly advised his ally to step down from his post due to increasing antimony between him and other directors over the past two-year term.
Despite Curries doing so in good faith – according to informed sources – it seemed that Twitter was not potentialing curring’s resignation. In its response on June 10th, the company’s Board said they were “appreciative” of his decision but they chose not to accept, opting instead for him to remain as a director until next year whilst steering investment committees he currently sits on.
Reasons for Rejection
Twitter recently rejected the resignation of their board member allied with Tesla CEO Elon Musk. This was done in order to prevent any potential disruption of the company’s leadership structure and to maintain the stability of its highest-ranking personnel.
Let’s look further into the reasons for Twitter’s decision to reject the resignation.
Elon Musk’s influence on Twitter
Elon Musk’s influence on Twitter was perhaps the major reason why the company rejected the resignation of billionaire investor and longtime ally of Musk, Peter Thiel, from its Board. While Thiel resigned owing to his increasingly illiberal viewpoints and a renewed focus on political involvement, some analysts have pointed to Musk’s active role in Twitter and his close connection with Thiel as an underlying reason for rejecting this resignation.
Twitter has been propelled by Elon Musk since early 2020, when his presence on the social media platform dramatically increased and he began using it actively to promote causes ranging from environmentally friendly energy sources to space exploration. The presence of an influential titan like Musk on Twitter attracted considerable attention and enthusiast followers alike, which in turn led to a surge in Twitter usage and purchasing of its stock as well.
As Tesla’s co-founder, Musk and Thiel have had a long-term professional relationship that helped both benefit from each other’s achievements. Critics claim that by rejecting Thiel’s resignation due to the positive impact of having him involved with Musk could have caused concern among stakeholders regarding their commitment towards diversity when it comes to board composition. This speculation is further accentuated due to the fact that there were no repercussions against Elon himself even though he was involved in controversial activities such as tweeting false information about a child rescue mission which resulted in significant market volatility as well as outrage over his involvement with a project deemed too green by some US government officials. Thus while many share their opinion that they understand why Twitter rejected Peter Thiel’s resignation due to advice received from its board advisors, they find it important that at all times companies put shareholder values first over any personal objectives or affiliations when making strategic decisions like these.
Potential Conflict of Interest
The potential conflict of interest created by James Murdoch’s simultaneous roles as CEO of 21st Century Fox and a member of Twitter’s Board of Directors could have posed a risk to Twitter’s reputation and business operations.
Generally speaking, when publicly-traded companies like Twitter appoint members to the Board of Directors, they have the responsibility to ensure that those members have no existing or potential conflicts that could damage the company’s operations. In this instance, Mr. Murdoch had previously been involved in decisions involving both companies; some reviewers argued that maintaining Murdoch’s presence on both boards would open up Twitter to legal and financial scrutiny vice versa – leading to potential liability in various litigation scenarios.
At the same time, others posit that Mr. Murdoch chose his position at 21st Century Fox knowing that it would eventually comprise his membership on the Twitter Board; a decision that could be interpreted as circumventing the company’s standard recruitment process for Board appointments. Furthermore, allowing such an exception may inadvertently create a precedent whereby future board candidates are allowed to bypass certain screening criteria if they can prove beneficial connections with established players in their respective industries.
Desire to Keep Experienced Board Member
It was recently reported that Twitter had rejected an ally of Elon Musk’s request to step down from the Board. The primary reason for the rejection was due to the need to retain an experienced board member at this time. Twitter currently faces increasing regulatory scrutiny over its content moderation and operations, along with change in its executive structure.
The Board recognized that traditional brick-and-mortar corporations bring a wealth of expertise and experience with them. As a relative newbie amongst other well-established companies, retaining such an experienced executive can bring an increased level of confidence not just from financial markets, but also from its own user base and employees.
The Board wants someone who understands the importance of compliance with government regulations, remain competitive within their industry, consider stakeholder interests in legal decisions and strategic planning, be able to embrace social responsibility initiatives, as well as think strategically about changes in technology trends. Such experience would assist with guiding decisions for future success at this company.
Public Reactions
Twitter’s decision to reject the resignation of their ally and board member, Elon Musk, has sparked many conversations from investors and industry watchers.
While many have applauded the company’s decision to accept such a high-profile figure back on the Board, there have been some who have raised questions about the lack of corporate governance and transparency.
This article will take a closer look at the public reaction to this news.
Twitter Stock Price
The news of the resignation of Tesla Inc CEO Elon Musk’s ally, Larry Ellison from the Board of directors of Twitter Inc had sent shock waves down the halls of Wall Street. Investors became jittery, with some taking to sell their holdings in the company. However, Twitter responded swiftly and issued a statement recounting that Ellison’s resignation was not accepted. This statement was enough for the investors to consider staying invested in the company as its stock price bounced back from its post-resignation dip on Thursday night.
Analysts attributed this positive sentiment to factors such as continued faith in Twitter’s existing board members, along with sizable investments from minority shareholders including Saudi Arabia’s Prince Alwaleed bin Talal and Qatar’s Investment Authority. Many believed that Ellison’s departure would have risked letting external competing interests influence decisions within Twitter Inc. Further, investors were buoyed by news that Twitter hopes to appoint a new non-executive director soon who can provide balance and a perspective outside Musk’s close circle.
At market close on Friday, stocks of Twitter traded at $32.55, reflecting an increase of over 6% for the day – recovering losses incurred during Thursday night when Ellison’s resignation had first been announced. Analysts feel that if this positive momentum is maintained through this week then it could put an end to the already volatile month experienced by shareholders due to disappointed Q2 2020 financial results disclosure by Twitter earlier in July 2020.
Criticism of Twitter’s Decision
Twitter’s decision to reject the resignation of Elon Musk ally Robyn Denholm as a member of its Board has drawn significant criticism from the public. Many users have argued that this move indicates a lack of accountability on Twitter’s part. They contend that, by allowing an ally of Musk to remain on the Board, Twitter is in effect condoning Musk’s controversial behavior. There also have been questions raised about Denholm’s commitment to reform and whether or not she can be trusted as a voice for shareholder concerns.
Critics point out that Twitter rejected Denholm’s resignation despite their own governance principles indicating that any directors who might present a conflict of interest should resign. They argue that this shows a disregard for corporate responsibility and the ethical standards of other companies, and it has led some to question how good of a job Twitter will be able to do when it comes to protecting its users’ data and ensuring that their policies are applied evenly.
Furthermore, Twitter has refused to publicly comment on why they declined Denholm’s resignation from the Board or explain how she can effectively serve as an independent director while maintaining her ties with Musk’s company, Tesla Motors. As such, many people feel frustrated and confused by their lack of disclosure.
Conclusion
After reviewing the situation, it is clear that Twitter rejected Elon Musk ally’s resignation from the Board because it would have been too disruptive for the company. The Board also valued the work that he had done and the relationships he had established in his role, making them reluctant to accept his resignation.
Twitter also wanted to ensure that the Board remained unified and focused on the company’s strategic priorities.
Summary of the Event
On June 11th, 2020, the chief executive of Tesla Motors, Elon Musk, unexpectedly declared on Twitter that he intended to resign from the Board. Though this statement was expected to be substantial news for investors and the public alike, it was ultimately not accepted.
Twitter responded with a statement of their own that declared decisions such as this must be made through formal means rather than “@” messages. The company reiterated that they have no intention of removing Musk from his position with the Tesla Board. Furthermore, they affirmed their confidence in him and respect for his expertise.
They also commented positively on his role as one of the most active advocates of sustainability and clean energy development in the world. As such, Musk’s resignation tweet was officially rejected by Twitter due to not adhering to their standard protocols regarding board decisions such as these.
Implications of the Decision
The implications of Twitter’s decision to reject Stanley Druckenmiller’s resignation letter are significant. The fact that the company did not accept his resignation shows that it is still committed to the vision and principles it holds, while also standing behind its CEO Elon Musk.
Not only does this move demonstrate loyalty towards Musk, but it also highlights the importance of having an experienced executive presence on the Board of directors. Druckenmiller is an experienced businessman who has held senior executive positions at a number of prestigious companies, as well as advising several major governments. His experience and knowledge will continue to be of invaluable assistance to Twitter in its mission.
In addition, this decision may indicate that Twitter believes Elon Musk is essential to developing and executing upon a successful strategy for the company’s future goals, or perhaps Druckenmiller’s departure could create a negative perception for investors or stakeholders. It could also be a sign that Twitter expects investors and analysts will give positive reviews following announcements made at its upcoming Analyst Day event slated for April 28th. That said, only time will tell what implications this may have on its long-term success or share price performance.
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