Billionaire Elon Musk has decided not to join the board of one of social media's titans, Twitter, the San Francisco-based company's CEO, Parag Agrawal, said Sunday night.
The announcement came as a surprise after Musk, the CEO of electric car maker Tesla, said he would be joining the board following his stock purchase of about 9.2 percent of the company.
"Looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months!" Musk tweeted April 4.
On Sunday Agrawal tweeted, "Elon has decided not to join our board."
He included a memo he sent to the company that noted Musk would be subject to a background check and, once appointed, would have to be loyal to the financial interests of the company.
The tech investor's loyalty to entities outside his orbit, which also includes his control of space travel startup SpaceX and tunneling concern the Boring Company, is a fair target of concern, given his record of using his bully pulpit to say things that turned out to boost stocks he holds.
Twitter may have brought him bad news: His self-promotion and criticisms are his own business if he's not a board member. On it, however, he might have to take his voice off Ludicrous Mode and start looking out for other shareholders.
"We were excited to collaborate and clear about the risks," Agrawal wrote in the memo, explaining how both parties wanted Musk onboard.
"We also believed that having Elon as a fiduciary of the company where he, like all board members, has to act in the best interests of the company and all our shareholders, was the best path forward," Agrawal said.
Elon Musk becomes Twitter's largest shareholderApril 4, 202201:24
The CEO said the only things between Musk and a board seat following the official announcement April 5 that he was joining Twitter's corporate governance were a background check and "formal acceptance" from the company.
But there were other strings attached.
An April 5 SEC filing from Twitter on Musk's expected board membership said he would be limited to a 14.9 percent stake in the company, generally speaking, as long as he had a governance seat. Now that he's walking away from the board position, he can theoretically increase his position as he wishes.
The Twitter chief said board membership was to have been finalized Saturday, but on Saturday morning Musk declined the position.
But his impact might be lasting. After he disclosed his stake in Twitter earlier this month it was discovered that he had been pumping money into the platform for 21 days after he reached a legal benchmark of owning 5 percent of the company March 14. The Securities and Exchange Commission requires disclosure on this kind of investment within 10 days.
Legal and securities experts told the Washington Post last week that by delaying the information Musk was able to continue buying Twitter stock at a price much lower than it would be post-announcement, effectively earning him $159 million, far greater, it would seem, than any possible SEC fines.
The news of Musk's investment boosted its stock price more than 27 percent and fueled his stake's worth to $2.89 billion by the end of that Monday.
Musk's investor status revealed, Twitter may have gotten a taste of what it was in for with a guy named Elon on the board: He quickly started suggesting substantial changes to the platform, including, he tweeted, "no ads."
He also wondered aloud if Twitter, which famously booted former President Donald Trump for allegedly inciting violence on Jan. 6, 2021, was dedicated to the principle of free speech.
Musk, a power user with more than 81 million followers, has long been one of Twitter’s loudest critics. And, like the former president, he's ridden the platform to his advantage.
Last year he polled followers on whether he should sell 10 percent of his stake in Tesla. When they voted mostly yes, the exercise might have felt like a meaningful vote. But a major portion of that stake was part of a plan documented months before to pay a mega tax bill and cash in on stock options that could expire.
In 2018 he set off an SEC crackdown when he claimed on Twitter to have enough funding secured to take Tesla private, an announcement found to be untrue but which boosted the carmaker's stock price by 6 percent the day it was made, government officials said.
The price for taking the company private at the time, Musk said, would be $420 a share because of the number's affiliation with marijuana culture.