You are here
Twitter, Elliott reach deal for Dorsey to stay on as CEO
TWITTER Inc on Monday reached an agreement with Elliott Management that lets Jack Dorsey stay as chief executive and adds three new directors a few days after Elliott's plan to push out the social media company's chief became public.
Elliott's head of US activism, Jesse Cohn, and private equity firm Silver Lake's co-chief executive officer Egon Durban, will join the social media site's board immediately and the company plans to appoint a third new director soon. Silver Lake also will invest US$1 billion in Twitter.
The agreement brings together hedge fund Elliott, which owns a US$1 billion stake in Twitter, and Silver Lake in an unusual arrangement that lets Mr Dorsey continue to lead the company, for now, and sidestep a potentially nasty proxy contest.
"While our CEO structure is unique, so is Jack and so is this company," Twitter's lead independent director Patrick Pichette said.
Twitter shares were up about 0.4 per cent on a day of heavy selling on Wall Street.
In reaching the agreement, Elliott keeps a close eye on Mr Dorsey while also giving the company more time to formulate long-term plans and repair missteps, people familiar with Elliott's thinking said.
They added that the deal avoids a mad scramble to find an immediate replacement for Mr Dorsey.
Twitter said said it would use the Silver Lake investment to help fund a US$2 billion share repurchase programme.
Twitter also pledged to grow daily users by 20 per cent or more in 2020 and beyond, roughly in line with user growth in its most recent quarter and its projections that costs and expenses would increase 20 per cent this year.
The board will also create a temporary committee to evaluate Twitter's leadership structure and CEO succession plan that will share the results publicly before the end of the year.
Late last month Elliott nominated four directors to Twitter's board and was pushing to remove Mr Dorsey, criticising him for being the CEO of two publicly traded companies: Twitter and Square, a financial services company. Each company, Elliott and other investors argued, deserves a full-time CEO.
Investors had also expressed concern about Mr Dorsey's plan to spend time living in Africa this year, something he talked last week amid growing fears about the virus.
"We invested in Twitter because we see a significant opportunity for value creation at the company," Elliott's Mr Cohn said, adding: "I am looking forward to working with Jack and the board to help contribute to realising Twitter's full potential."
2020 promises to be a big year for Twitter with people looking to the company for news about the coronavirus, the US election and the planned Olympics in Tokyo. REUTERS