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Twitter announced that is has reached an agreement with activist investor Elliot Management Corp., which had called for the ouster of Jack Dorsey as CEO of the social media company. The deal leaves Dorsey as chief executive and adds two new members to Twitter's board. The board will continue its search for a third independent director to add to the board, with a focus on candidates that are experts on AI and other technologies.
The announcement comes after previous media reports said that Elliot Management, which had acquired around a 4% ownership stake in Twitter, was seeking to remove Dorsey as chief executive of the company. The $40 billion hedge fund has a history of pushing for leadership change at companies with under-performing stocks. Last year, the firm demanded a shakeup at AT&T after amassing a $3 billion stake in the company, eventually reaching an agreement with AT&T to implement changes at the company.
As part of the transaction, Twitter announced that Silver Lake, a technology investment firm, will make a $1 billion investment in the company. Part of the investment will be used to fund a $2 billion share repurchase. Egon Durban, co-CEO and managing partner of Silver Lake, and Jesse Cohn, a partner at Elliott, will join Twitter’s board.
“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,” Durban said in a statement.
The deal prevents Dorsey from losing his CEO title a second time after he was pushed out in 2008 from the company that he co-founded. He became CEO again in 2015. Dorsey also serves as CEO of Square, a financial technology company he co-founded. His dual responsibility as chief executive of two publicly traded companies has caused concern for some investors, and was reportedly a primary reason that Elliot Management was seeking his removal as Twitter’s CEO.
The leadership of the company may be subject to further change upon evaluation by a new board committee that was formed as part of the deal to examine Twitter’s leadership structure. It plans to report its findings by the end of the year.