Twitter’s Dorsey stays CEO after nod from activist investors
A Twitter Inc. board committee reviewing the social network’s leadership and management structure concluded that Chief Executive Jack Dorsey should maintain his role at the helm of the company.
The committee was asked to formally review Twitter’s leadership as part of an agreement in March with activist investor Elliott Management Corp. and private equity firm Silver Lake, which took stakes in the San Francisco-based company earlier this year. The independent board panel, which included representatives from Elliott and Silver Lake, concluded that the current management structure is sufficient, and the full board accepted that recommendation, according to a company filing on Monday.
“The committee expressed its confidence in management and recommended that the current structure remain in place,” the filing reads. “The board will continue to evaluate company and management performance according to a range of factors, including the company’s operating plan and established milestones.”
The decision is an endorsement of Dorsey and his unconventional arrangement, which includes holding a second full-time CEO job at Square Inc., the payments company he co-founded. Dorsey has managed to lead two publicly traded companies in vastly different industries despite a unique management style, which included a strong belief in remote work well before the COVID-19 pandemic made such arrangements commonplace. The vote of confidence is also a turnaround from the activists’ earlier plan to replace Dorsey, though potential board changes could still make that possible in the future.
The committee also proposed a plan to reduce the terms of Twitter’s directors to one year from three. The current three-year terms stagger the board members’ reelections. Shareholders will be asked to approve a change to the company’s bylaws putting the directors’ terms at one year beginning with each election after the 2021 annual meeting, according to the filing. Any director with time remaining on a three-year term will be able to complete it.
The move could make it easier for outside investors, like Elliott, to replace board members in an effort to take control. Twitter, unlike Facebook Inc. and Snap Inc., has one class of stock, which means co-founder Dorsey doesn’t have the protection of super-voting shares to stop outsiders from gaining meaningful influence on the company.
The board also accepted the committee’s work to update “the CEO succession plan in line with best practices,” although the filing doesn’t offer details. A Twitter spokesman declined to comment beyond the filing. A representative for Elliott also declined to comment.
Twitter had long been considered an activist takeover target before Elliott and Silver Lake invested earlier. The company offers one of the world’s most influential products, but has struggled to consistently increase its user base and business. Total shareholder returns since the day before Elliott disclosed its stake in Twitter, Feb. 28, have amounted to about 19%, according to data compiled by Bloomberg.