By Aaron Miller
Twitter has agreed a deal with investment firms Elliott Management and Silver Lake that protects the high post of CEO and founder Jack Dorsett, the company announced Monday. The deal follows an attempt by Elliott Management to eliminate Jack Dorsey as CEO of twitter and establish a new team of directors for the social media giant.
The deal will see Dorsey keep his coveted post as the company’s CEO while the company prepares a $2bn share buyback programme partly funded by Silver Lake firm. Under the new agreed deal of a $1 billion investment in Twitter from Silver Lake, the investment firms will each be awarded a seat on Twitter’s board, according to the announcement.
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Silver Lake co-CEO and managing partner Egon Durban and Elliott partner Jesse Cohn will join the board as Twitter continues to search for a third new independent director with expertise in technology and artificial intelligence. Twitter is searching for a candidate “that reflecst the diversity of the Twitter service,” the release said.
A Elliott Management were on the verge of forcing out Jack Dorsey as CEO of Twitter to help boost the social platform’s flagging growth, it looks like we have a truce of sorts between the two.Part of the grand deal will see Elliott use that investment plus cash on hand towards a $2 billion share repurchase program. Along with that, there are two new people joining Twitter’s board of directors, Silver Lake’s Egon Durban and Elliott’s Jesse Cohn; the company said it is also seeking a third to join as part of the agreement.
“Twitter serves the public conversation, and our purpose has never been more important,” Dorsey said today in a statement. “Silver Lake’s investment in Twitter is a strong vote of confidence in our work and our path forward. They are one of the most respected voices in technology and finance and we are fortunate to have them as our new partner and as a member of our Board. We welcome the support of Egon and Jesse, and look forward to their positive contributions as we continue to build a service that delivers for customers, and drives value for stakeholders.”
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Twitter was clear to state that the agreement between Silver Lake, Elliott and the company will see the new directors unable to influence Twitter policies and rules and enforcement decisions.Patrick Pichette, who is the independent director of the Twitter Board, will become the chair of the committee to find another board member. “Twitter has undergone remarkable change over the last several years,” he said in a statement.
“We are deeply proud of our accomplishments and confident we are on the right path with Jack’s leadership and the executive team. As a Board, we regularly review and evaluate how Twitter is run, and while our CEO structure is unique, so is Jack and so is this Company. To continue to ensure strong governance, we are pleased to create a temporary Board committee that will build on our regular evaluation of Twitter’s leadership structure.
This committee, which I will chair, will provide a fresh look at our various structures, and report the findings to our Board on an ongoing basis. In an environment where certainty is scarce, I can say with certainty that today we have taken steps to meaningfully strengthen what is already a world-class Board.”
Whether or not Pichette is one of the tacit supporters of the current leadership status quo, it seems that for now investors are willing to give Dorsey a shot, provided there is more active input from board members who are investors.
“Twitter’s revolutionary platform is a cornerstone of the public discourse,” said Durban, who is the co-CEO and managing partner of Silver Lake. “We are impressed by Jack’s tireless work over the last few years to solidify the leadership team, improve the product and strengthen the Company. We are excited to partner with Twitter as an investor and a member of the Board. Jack is a visionary leader, and a critical force behind Twitter’s ongoing evolution and growth. I look forward to working alongside the entire Board and the executive team to drive Twitter’s long-term innovation and success.”
Jesse Cohn, partner at Elliott Management, added: “Twitter is one of the most important platforms in the global dialogue, and one of the most innovative and unique technology companies in the world. We are pleased to have worked collaboratively with Twitter on this constructive engagement. We invested in Twitter because we see a significant opportunity for value creation at the Company. I am looking forward to working with Jack and the Board to help contribute to realizing Twitter’s full potential. Twitter’s board is set to create a temporary committee “that will build on our regular evaluation of Twitter’s leadership structure,” lead, according to independent director Patrick Pichette.
Pichette will chair the committee, which “will provide a fresh look at our various structures, and report the findings to our Board on an ongoing basis,” he said. Elliott’s campaign to remove Dorsey as CEO came after the executive announced plans to temporarily move to Africa while running both Twitter and Square.
Dorsey is the only person to lead two public companies with market valuations greater than $5 billion as CEO. While under pressure from Elliott, Dorsey said last week he’d reconsider the move to Africa, blaming coronavirus fears “and everything else going on.” Pichette’s statement also expressed confidence in Dorsey’s ability to run both companies at once.
“As a Board, we regularly review and evaluate how Twitter is run, and while our CEO structure is unique, so is Jack and so is this Company,” Pichette said.
Twitter also shared new metric goals in its announcement. ”[I]n 2020 and beyond,” the company seeks to grow monetizable daily active users (mDAUs) “at 20% or more.” The company recently changed its reported user metric to mDAUs, which it says only counts users that can be targeted with ads and are not comparable to other common industry metrics like DAUs. Twitter also said that beyond 2020, it plans to “accelerate revenue growth on a year-over-year basis and gain share in the digital advertising market.”
According to the terms of the agreement, Elliott Management and Silver Lake will not “comment on or influence, or attempt to influence, directly or indirectly, any Twitter policies or rules, or policy or rule enforcement decisions, related to the Twitter platform.”
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