Analysis: Elon Musk gives Twitter a wildcard as shareholders demand reforms

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April 15 (Reuters) – Twitter’s newest big shareholder Elon Musk (TWTR.N) could alter the course of the social media company as management battles a series of proxy proposals focused on topics ranging civil rights to politics at its upcoming annual meeting, activist shareholders and corporate governance experts said.

Regardless of the outcome of Musk’s $43 billion bid to buy Twitter, announced Thursday, investors with opposing political views have described the billionaire entrepreneur as likely to work to undo some of the restrictions on content that Twitter has imposed as it attempts to promote freedom of expression while combating hate. speeches and false information. Read more

Even if he fails to buy Twitter, the Tesla CEO (TSLA.O), who recently disclosed a 9.6% stake, is seen as likely to vote in a way that could rock the company during of its May 25 virtual meeting, people who follow corporate governance issues said. Read more

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“Given where Musk has positioned himself with respect to Twitter’s strategy and given that he wants to be kind of a disruptor, I don’t see him voting with management very often,” said Brian Bueno of Farient Advisors, a corporate governance and executive compensation firm. consulting firm.

Musk said his offering price of $54.20 per share was intended to promote open discourse. At the virtual meeting, he will control the second-largest stake after Vanguard Group, enough to give either investor a kingmaker role in tight competition.

Musk did not immediately respond to requests for comment on how he might vote on Twitter.

Musk’s star power will likely draw a lot of attention to the event, said Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware. “He’s a well-known person in the midst of all of this, so it will increase interest in the vote and could have a big impact,” Elson said.

Although Twitter adopted a shareholder rights plan on Friday to defend itself against Musk, Elson said its impact on the vote may only be to make proxy advisers, who tend to frown on such so-called saying “poison pills”, more skeptical of management. Read more

FIVE HOT TICKET ITEMS

Twitter is facing five shareholder proposals, all opposed by management, dealing with matters that attract investor attention. Read more

Two belong to conservative groups, one calling Twitter to account for its impact on civil rights and the other for its lobbying activities. Scott Shepard, a fellow at the right-wing think tank National Center for Public Policy Research, one of the sponsors, called Musk’s offer “great” for shareholders.

Shepard said he hoped Musk would steer Twitter away from censorship, and his group criticized the company for moves such as banning former US President Donald Trump’s account after the storming of the US Capitol. because of the risk of further incitement to violence.

“Twitter under Musk will be as it should be — both from a civic standpoint and a value standpoint — throughout,” Shepard said via email.

Meredith Benton, founder of Whistle Stop Capital, which focuses on social and environmental issues and filed a resolution critical of nondisclosure agreements for employees, takes a gloomier view.

“Missteps, pushing for his own (Musk’s) unfettered speech, risk destroying the platform’s appeal to millions of people who need to feel safe before they can speak out” , Benton said.

A fourth proposal filed by New York State Pension Fund overseers, who declined to comment, calls for Twitter to be accountable for its election spending.

A fifth proposal was filed by Arjuna Capital, calling on Twitter to appoint at least one board member with a human or civil rights background. Arjuna’s managing partner, Natasha Lamb, said she would expect Musk to support the proposal as it is in line with his free speech concerns.

But she called Musk’s takeover offer “troubling” as a further consolidation of power on social media, where good governance is key.

“We don’t need Twitter run by another social media emperor. We need it run by experts,” Lamb said.

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Reporting by Ross Kerber in Boston and Sheila Dang in Dallas; Editing by Kenneth Li and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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