Specter Of Elon Musk—And His Wishy-Washy Buyout—Loom Over Twitter’s Shareholder Meeting

Elon Musk didn’t speak at Wednesday’s annual meeting of Twitter shareholders, and he didn’t say anything about it on Twitter. But, gosh, the guy still managed to loom large over the day. The musk of Musk—it’s a potent thing.

You could tell something was in the air from the two shareholder proposals put forward by the National Center for Public Policy Research, a conservative think tank, and the impassioned comments the center’s executives gave about the ideas.

One called on Twitter to conduct an audit into its diversity efforts, which the right-leaning group says have gone too far and now discriminate against men and white people. The other asked Twitter to publish a review into its lobbying efforts, which the research center, presumably, thinks will show Twitter’s liberal bias.

“Let’s cure the DEI mind virus spreading inside Twitter,” said a speaker from the think tank. He addressed his remarks directly to Musk and referenced Musk’s recent similar-sounding comments about a “woke mind virus.” By that, Musk means he thinks it’s foolish for companies to cave to the increased attention on race, diversity and social justice over the last several years.

Twitter shareholders rejected both proposals from the National Center for Public Policy Research, but that’s not really the point of discussing the proposals. Point is, they made into the meeting! They weren’t on the initial agenda. They were a pair of late entries made after Musk disclosed his takeover plans for the company, which, of course, he now says he has paused, and his complaints about the business, which do sound a lot like the ones voiced by the National Center of Public Policy Research. The proposals speak to who Musk is speaking to and to where he draws support. He may say he’d like Twitter to act politically neutral, but there’s nothing politically neutral about the proposals put forth by the guys name-checking him. Rather, they’re deeply conservative. In the end, they’re a helpful reminder that Musk’s politics are really a quacks-like-a-duck scenario, where his words’ implicit meaning is what’s most important.

You could see Musk’s presence again when Twitter tried to get current director Egon Durban, the co-CEO of Silver Lake, reelected, which Twitter shareholders had no time for. Durban lost reelection.

Durban joined the board in 2020 after another Twitter narrowly survived a different activist investor’s interest in the company. More pertinently, Durban and Musk are buds. Durban and Durban alone was the only person Musk spoke to before his now infamous 2018 tweet about taking Tesla private; three days later, Durban turned up at Musk’s home to talk through their options about securing the funding Musk said he’d already secured.

Twitter shareholders’ turn against Durban might suggest they’re growing a little tired of Musk and couldn’t stomach re-seating a top ally of his. It might also suggest they headed the warning sounded by ISS, a research firm whose reports often sway the outcome at shareholder meetings. ISS advised shareholders turn down Durban but not because of his Musk connections. Instead, ISS based its case around the fact that Durban’s a busy guy. He sits on five corporate boards—Dell, Intelsat, Motorola, WME and Twitter—which means Twitter at most receives only divided attention from Durban, who is also, of course, managing the investment operations behind $79 billion-in-assets Silver Lake. Lots going on! And with everything going on just at Twitter, maybe the shareholders made the sensible call.

And you could see Musk again plainly in the shareholders’ decision to reject a proposal to change the structure of Twitter’s board, one the company supported. As Twitter’s governance currently works, the directors serve staggered terms. What this means is an outside investor (like a Musk) can’t sweep into town and replace the board in one fell swoop, since only a few directors stand for election each year. (At some companies, every director stands for election each year.) The outside investor (like Musk) would have to hang on for a couple years to fully restock the board. You might read Twitter shareholders’ decision to quash this motion as a signal they’re done with Musk and are losing interest in his bid. At the very least, it indicates they’re not interested an action that’s a little like removing the deadbolt from a front door. Easy that way to enter—easier for Musk (or someone like him in the future) to push a takeover bid through.

(Now, very quickly, here’s what shareholders did approve at the meeting: two proposals that will require Twitter to document how its uses concealment clauses, a tactic to silence departing employees, and semiannual reports about how its corporate funds might influence elections. The company had opposed both measures.)

Formally, CEO Parag Agrawal and the other Twitter executives declined to talk about Musk or the deal, which Musk has said is now “on hold” over concerns Twitter misstated estimates about spam accounts. Fat chance they were getting through the meeting’s question-and-answer section without getting asked something, though. And sure enough, one investor, innocuously enough, asked what happens to a public shareholder’s stock in a company when it is bought and taken private. Nope! They could not even talk about that, the Twitter executives said. (It’s not a hard answer to give. The shareholder wouldn’t own them anymore. If Musk’s buyout happened, they’d get a check for $54.20 a share in the mail. ...Unless they’re a big, big shareholder, like, say, a Prince Alwaleed. Then Musk will totally let them hang onto those shares because he wants additional big investors to join him in his crazy takeover, reducing how much of his Tesla fortune gets tied to it.)

Sometime in the future, we may go through this exercise again with Twitter calling another meeting for investors to vote on Musk’s buyout. (Officially, this’ll be termed a “special shareholder meeting,” since the company certainly does not want to make buyout proposals into an annual thing.) Of course, this assumes neither Twitter nor Musk will somehow scotch the deal before then. But if they don’t, and we do get another shareholder meeting, Musk won’t be some hovering shadow then. He’ll be the main event.