In a case filed in federal court in California on Wednesday, Twitter investors sued billionaire Elon Musk for delaying the disclosure of his ownership in the social media business. Musk allegedly saved $156 million by neglecting to declare that he had bought more than 5% of Twitter by March 14th, according to the investors. He continued to acquire shares after that, eventually revealing that he controlled 9.2% of the firm in early April.
“By delaying the disclosure of his Twitter interest, Musk participated in market manipulation and purchased Twitter shares at an artificially low price,” the investors, led by Virginia resident William Heresniak, said. Musk filed the lawsuit after pledging an extra $6.25 billion in equity financing to cover the $44 billion bid for Twitter Inc, effectively canceling the billionaire’s margin loan on his Tesla Inc shares.
Even though Musk had last week connected the purchase’s development to Twitter delivering evidence that spambots accounted for fewer than 5% of total users, the revelation made in a regulatory filing on Wednesday indicated Musk is attempting to conclude the acquisition. During the company’s annual shareholder meeting on Thursday, Twitter Director Egon Durban, the co-Chief Executive Officer of private equity firm Silver Lake, did not get enough votes to be re-elected to the board.
Durban’s re-election had been advised against by Institutional Shareholders Services, an advisory group since he served on the boards of “more than five publicly-traded firms.”
Despite failing to earn a majority of shareholder votes, Durban may still be a Twitter director, according to Twitter’s proxy statement. Before the vote, the corporation required board candidates to submit an “irrevocable resignation,” which would take effect if the person failed to earn shareholder approval and the board accepted the resignation. According to the proxy statement, the board has the ability to reject the resignation and keep the candidate on as a director.
A Twitter representative stated, “Egon Durban has submitted his resignation to the board.” “The Board’s Nominating and Corporate Governance Committee will evaluate whether to propose that the Board accept Mr. Durban’s resignation as soon as possible and will give an update in due course,” says the statement.
Former CEO Jack Dorsey did not run for re-election on Wednesday, and he is no longer a board member, thereby terminating his official association with the social network he co-founded in 2006. He has been on the board of directors since 2007 and most recently served as the CEO of Twitter from mid-2015 until his departure last year.
It’s hardly surprising that Dorsey didn’t run for re-election to the board; he announced in November that he would step down as CEO and quit the board when his tenure ended. However, now that Dorsey has left the firm, for the very first time in Twitter’s existence, none of the company’s co-founders are employed by the business or serve on its board of directors.
On Wednesday, shareholders of Twitter voted on a variety of different topics, but they were not given the opportunity to weigh in on the most significant development that is currently facing the San Francisco-based company: a potential takeover by billionaire Elon Musk. In late April, the board of directors of Twitter approved Musk’s plan to take the firm private for $44 billion. The shareholder vote on whether or not to approve the purchase will be held at a later date to be determined.
Source: Business Standard