Twitter investors vote against re-electing Elon Musk ally to board

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Picture used for illustrative purposes only.

Twitter Inc investors blocked the re-election of an ally of Elon Musk to the board at an annual meeting on Wednesday that avoided the biggest question for the social media company: will it complete a $44 billion sale to the billionaire?

Investors voted against Egon Durban, the co-head of private equity firm Silver Lake, who partnered with Tesla CEO Musk on his abandoned bid to take the electric carmaker private.

The rebuke of Durban comes as uncertainty looms over the deal.


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Musk tweeted on May 13 that the Twitter deal was “temporarily on hold” while he sought more information about the proportion of fake accounts on Twitter.

The company last week said it remained committed to the deal at the agreed price and on Wednesday said it would not answer questions about the deal at the virtual meeting.

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Elon Musk gestures for a photograph.

“The Twitter board has not embraced Elon Musk and his vision for Twitter. So the fact that his ally has been removed from the board is not surprising,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

Twitter’s board initially voted to adopt a poison pill that limited Musk’s ability to raise his stake in the company, but later voted unanimously to accept his buyout offer.

The vote could indicate scepticism among shareholders of Musk’s plan or his willingness to pay what he offered, but investors are expected to overwhelmingly approve the deal at another meeting yet to be scheduled.

Some shareholders who filed proposals at the meeting appealed directly to Musk in their presentations.

“Mr. Musk, if you’re listening, we hope that you’ll join us in voting for this proposal,” said Ethan Peck, an associate at the National Centre for Public Policy Research, which asked Twitter to commission an audit on its impact on civil rights.

Investors voted in favour of creating reports on electoral spending and on risks of using concealment clauses, such as non-disclosure agreements, according to preliminary voting results from the meeting.

Many advocates say that companies that aim to stop sexual harassment and similar issues should allow workers to discuss the matters in public, which is often impossible with concealment clauses.

However, shareholders voted against annual elections for directors, or declassifying the board, which would make members more accountable to investor approval. The current terms are multi-year and staggered, preventing a sudden, major change.

Shareholders followed management advice to vote against other proposals, including one that would commission a report on company lobbying expenditures.

They re-elected Patrick Pichette, a general partner at Inovia Capital, to the board.

No vote on Musk bid

Twitter’s regularly scheduled shareholder meeting Wednesday didn’t include a vote on Tesla billionaire Elon Musk’s $44 billion bid for the social platform. That vote will take place at a yet-undetermined date in the future.

CEO Parag Agrawal said at the outset that executives won’t be answering any questions surrounding the proposal. Even a question from a stockholder asking what will happen to his shares if someone buys Twitter and takes it private was shot down. (If this happens, the stockholder would be paid the agreed-upon purchase price for each share and the stock would be delisted).

Musk did not join the meeting, although he could have, being one of Twitter’s largest shareholders.

But the drama surrounding his offer – almost all of it created by Musk himself – threatened to spill over into Wednesday’s proceedings. Shareholders raising proposals for a vote frequently invoked his name. One proposal, by the New York State Common Retirement Fund, called for a report on Twitter’s policies and procedures around political contributions using corporate funds. It passed in a preliminary vote.

Two proposals brought by conservative-leaning groups failed to garner enough votes to pass. One called for an audit on the company’s “impacts on civil rights and non-discrimination” and referred to “‘anti-racism’ programmes that seek to establish ‘racial/social equity’” as “themselves deeply racist.” The other sought more disclosure on the company’s lobbying activities.

Several proposals spoke to the deep existential conflict that’s been playing out among Twitter’s users, employees, shareholders and employees. While shareholders on one side lambasted the company for what they see as too-liberal politics and a bias against conservatives (for which there is no reliable evidence), others said the company is failing to protect users from harassment, abuse and misinformation.

Musk’s “free speech” edict – which he has indicated would govern the company if he takes over, without offering details – has only inflamed the conflict.

Agencies

 

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