Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book "Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies " (Nicholas Brealey)
Days after the announcement Tesla CEO Elon Musk would join Twitter's board of directors comes word that the headline-making move will not take place after all.
Could his tweets about Twitter have something to do with the sudden and equally news-making reversal? Or were they simply the latest examples of Musk's penchant for tweeting that has landed him in hot water before?
CNN reported that "The announcement that Musk would no longer join the board came after he posted a series of tweets about the company over the weekend, including one in which he suggested removing the 'w' from 'Twitter'—an apparent crude joke that has since been deleted—and another in which he asked if Twitter is 'dying' because some of its most-followed accounts don't often tweet."
"Corporate board members...typically share their suggestions for the company privately, which might have meant Musk would have had to stop tweeting about his ideas for Twitter."
Opening The Door To A Hostile Takeover?
According to CNBC, "Billionaire Elon Musk's reversal of his decision to join Twitter's board opens the door to a hostile takeover and could lead to additional volatility in the stock, according to analysts.
"Musk's decision not to join Twitter's board means he's no longer limited to owning just 14.9% of the company. Now, many analysts suggest the Tesla CEO could bolster his stake and eventually try and establish control."
Reason Not Disclosed
According to Reuters, "Musk and Twitter did not disclose the reason for the u-turn. Musk said in a regulatory filing on Monday he could now increase his 9.1% stake in Twitter or push the company to pursue transactions, even though he has no such plans at this time.
"There was no sign that Twitter was worried that a hostile bid from Musk was imminent. In announcing the development, Twitter disclosed no shareholder rights plan, known as a 'poison pill,' that would force dilution if Musk tried to raise his stake above a certain threshold."
Statement From Twitter's CEO
In his tweet Sunday night announcing Musk's reversal, Twitter CEO Parag Agrawal said the company's board had "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."
"Elon's appointment to the board was to become officially effective 4/9, but Elon shared that same morning that he will no longer be joining the board," Agrawal said in his own tweet. "I believe this is for the best. We have and will always value input from our shareholders whether they are on our Board or not. Elon is our biggest shareholder and we will remain open to his input."
Other Newsworthy Tweets From Musk
Musk's tweets about Twitter are hardly the first time his comments on the social media platform have created controversies or problems for the billionaire.
In 2021, the Wall Street Journal reported that, "Securities regulators told Tesla Inc. last year that Chief Executive Elon Musk's use of Twitter had twice violated a court-ordered policy requiring his tweets to be preapproved by company lawyers," according to records obtained by The Wall Street Journal.
"Tesla and the Securities and Exchange Commission settled an enforcement action in 2018 alleging that Mr. Musk had committed fraud by tweeting about a potential buyout of his company. Mr. Musk paid $20 million to settle that case—Tesla also paid $20 million—and agreed to have his public statements on social media overseen by Tesla lawyers."
Fortune reported last November, "Even by the standards of Elon Musk—who said in 2019 his Twitter feed had pretty much descended into nonsense—last weekend's poll on whether he should sell 10% of his Tesla Inc. stock was outlandish.
"After a clear majority (58%) of 3.5 million Twitter users voted yes, Tesla shares tumbled the most in eight months in New York trading Monday, falling as much as 7.3%. The stake would be valued at about $21 billion based on the 170.5 million Tesla shares he holds.
"Whether he goes through with it or not, the attention-grabbing move was just the latest in a long history of Musk using Twitter and his legions of fans on the platform to stoke interest in Tesla and his other ventures, sometimes pushing the envelope with tweets that veer from tongue-in-cheek to deliberately outrageous."
Advice For Business Leaders
Be Careful Where You Invest Your Time
Barbara Bell is the author of Flight Lessons: Navigating Through Life's Turbulence and Learning to Fly High. She said that" As leaders, we need to be careful with where we invest our time, money and energy. We can't choose to be a part of every boardroom, however, we do still have the power to influence. Elon Musk is the perfect example.
"He has already set the precedent that he is watching by becoming Twitter's largest individual shareholder. That alone speaks for itself. Musk participates in the knowledge economy by being a hardware provider, changing the way we view electric cars, rockets, satellites, and advanced battery technology," Bell noted.
"That is his focus area and what he does best. As a leader, knowing where you can make the most influence is critical - and doesn't always require involvement in the boardroom," she concluded.
Risks Of Associating With Unpredictable People
Nicholas Creel is an assistant professor of business law at Georgia College and State University. He pointed out that, "Musk suddenly not being on a path to a seat on Twitter's board of directors illustrates to business leaders the impossibility of safely associating with a high profile billionaire known for their unpredictable nature.
"Twitter essentially tried to moderate Musk's influence over them by offering a place for him on the board, which would've ultimately prevented him from pursuing a hostile takeover and given him a corporate governance role over a long period of time. Now, without that constraint, Musk could suddenly pursue a hostile takeover or drop the stock entirely. Twitter is more or less at his mercy and there really isn't much they can do about it."
Be Thoughtful When Making Decisions
Isaiah Henry is the CEO of Seabreeze, a property management company. He said that "It's important for leaders to be thoughtful in their decision making. Rash decisions or communication, such as tweets usually have consequences. When you're in the public eye, your reputation is everything. Keep your image intact by thinking through everything you do and say. You'll face less backlash and instill more trust within your industry.
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