Twitter boss Jack Dorsey keeps jobs after firm strikes deal with activist Elliott
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Twitter boss Jack Dorsey will hold on to his position after the social media firm struck a deal with an activist investor that mounted a dramatic coup attempt.
Hedge fund Elliott Management, which is led by billionaire Paul Singer, has built a stake of roughly four per cent in Twitter and pushed for an overhaul of the board that included replacing Dorsey.
The move is understood to have been a backlash against Dorsey’s dual role as chief executive of Square, the payments company he co-founded in 2010.
However, Twitter today said it has signed a deal with Elliott and US private equity firm Silver Lake that appears to have granted the chief executive a reprieve.
As part of the deal, tech-focused Silver Lake will invest $1bn (£760m) in the social media firm. Twitter said it will use the investment to help fund a $2bn share buyback.
In addition, Elliott’s head of US equity activism Jesse Cohn and Silver Lake co-chief executive Egon Durban will join the Twitter board. A third new independent director will be named in the coming months.
However, the danger has not passed for Dorsey, as the board will form a new five-person committee, including both Durban and Cohn, to evaluate Twitter’s leadership structure.
As part of this, the committee will evaluate the chief executive succession plan and make recommendations on corporate governance, including eliminating the company’s staggered board. It will report on its findings before the end of the year.
Patrick Pichette, lead independent director of the Twitter board, said the company had “undergone remarkable change over the last several years”.
But he insisted the firm was “confident” it was “on the right path” under Dorsey’s leadership.
“Twitter serves the public conversation, and our purpose has never been more important,” Dorsey said in a statement.
“Silver Lake’s investment in Twitter is a strong vote of confidence in our work and our path forward.”
Dorsey had also raised eyebrows by announcing he would spend up to six months of 2020 in Africa, but he has since put the plans on hold due to the coronavirus outbreak.
Some investors have called for Twitter to make greater returns. Cohn today said that Elliott had invested in Twitter because the firm was a “significant opportunity for value creation”.
“I am looking forward to working with Jack and the board to help contribute to realising Twitter’s full potential,” he added.