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Business News/ News / World/  Activist investor seeks to replace Twitter CEO Dorsey
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Activist investor seeks to replace Twitter CEO Dorsey

The New York-based firm has nominated four directors to Twitter’s board
  • The company has, however, fallen behind on innovation, choosing to focus on its core
  • Elliott approached San Francisco-based Twitter about its concerns privately and has had constructive discussions with it since then (AP)Premium
    Elliott approached San Francisco-based Twitter about its concerns privately and has had constructive discussions with it since then (AP)

    Activist investor Elliott Management Corp. has taken a sizable stake in Twitter Inc. and plans to push for changes at the social media company, including replacing Chief Executive Officer Jack Dorsey, according to people familiar with the matter.

    The New York-based firm has nominated four directors to Twitter’s board, said the people, who asked to not be identified because the matter isn’t public.

    There are only three seats becoming available at this year’s annual meeting but Elliott wanted to ensure that it nominated enough directors to fill all three seats or any other vacancies that may arise, the people said. The exact size of Elliott’s stake couldn’t be determined.

    Elliott approached San Francisco-based Twitter about its concerns privately and has had constructive discussions with it since then, the people said.

    A representative for Elliott declined to comment. A representative for Twitter didn’t immediately respond to a request for comment.

    Elliott’s push comes at a pivotal time with the U.S. election, Summer Olympics and other major events, like the spread of the coronavirus, which tend to attract more users and advertisers to Twitter.

    The company has, however, fallen behind on innovation, choosing to focus on its core service while other social media competitors like Snap Inc. and Instagram develop filters and stories popular with their users.

    Twitter has been a potential target for activist investors for years. The company only has one class of stock, which means co-founder Dorsey doesn’t have voting control of the company like Facebook Inc.’s Mark Zuckerberg or Snap co-founders Evan Spiegel and Bobby Murphy.

    Dorsey is one of the only people to serve as CEO of two large public companies at the same time -- he also runs Square Inc. That makes him a potential target for criticism whenever Twitter stumbles. He has also said he plans to work up to six months a year in Africa.

    Elliott isn’t the only investor to voice concerns about Dorsey and Twitter’s governance.

    In December, Scott Galloway, a professor of marketing at New York University’s Stern School of Business, penned a letter about his own concerns as an investor in the company.

    “To be clear, my primary objective is the replacement of CEO Jack Dorsey," Galloway said in an open letter to the company’s executive chairman, Omid Kordestani. “However, your firm’s weapons of mass entrenchment include a staggered board that may force shareholders to seek to replace other directors, including yourself, first."

    Twitter rose 0.6% to $33.20 in New York trading Friday, giving the company a market value of about $26 billion.

    The stock declined more than 20% on Oct. 24 after the company delivered third-quarter results that fell far short of analyst estimates. Twitter also said at the time its privacy issues involving targeting data would continue to weigh on its advertising business. The company blamed “bugs" in the way it targeted ads and shared personal information for the miss.

    Elliott has a long history of agitating for changes at some of the world’s largest companies. This month, the firm disclosed a stake in Japan’s SoftBank Corp. and said it planned to push for a larger share buyback and governance changes at the firm’s Vision Fund.

    Elliott has also pushed for changes at AT&T Inc., EBay Inc., Marathon Petroleum Corp. and Pernod Ricard SA.

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    This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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    Published: 29 Feb 2020, 12:09 PM IST
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