Twitter CEO Jack Dorsey has come under threat from a new stake holder who wants to oust him from the company amid fears he is distracted
Twitter shares soared on Monday after it emerged that a Republican mega-donor had bought a large share of the company and was attempting to oust CEO Jack Dorsey.
Paul Singer, founder of investment management firm Elliott Management, has taken a $1billion stake in the social media company and is planning to use his newfound influence to push for many changes, starting at the top.
He has nominated four directors, including two people from his New York-based hedge fund.
According to insiders cited by Bloomberg, Singer’s main grievance is that Dorsey splits his time as CEO of Twitter and CEO as Square Inc, his mobile payments app from which he derives the majority of his reported $5billion fortune.
Singer believes his undivided attention should be devoted to Twitter, especially given the looming 2020 election and other global news events which the company has a role in spreading information about.
He is also a staunch Trump supporter. While his views on Dorsey’s politics are not known, many Republican pundits or activists have criticized the Twitter CEO for banning political ads or even banning them when they share conservative content on the site.
Twitter shares were up by seven percent in pre-market trading on Tuesday. They opened at $35.95 on Tuesday morning, their highest for days
After news of the attempted coup spread over the weekend, Twitter shares rose by seven percent to $35.75, three percent more than they had all year. It boosted the company’s overall value by $1billion to slightly over $28billion.
They opened on Tuesday morning at $35.95 – even higher.
But while the market responded keenly to the news, Twitter employees revolted against it.
They started tweeting their support of Dorsey with the hashtag ‘#WeBackJack’ and even Elon Musk, the eccentric founder of Tesla whose own presence on Twitter has caused problems for his company, shared his support.
‘Just want say that I support @jack as Twitter CEO. He has a good [heart],’ Musk tweeted, using a red love heart emoji.
Dorsey is yet to make a comment on the reports of Singer’s take-over.
Twitter executives met with Singer and his representatives in San Francisco on Friday night but Dorsey was not present for the meeting.
Elon Musk tweeted his support of Musk on Monday as news of Singer’s attempted takeover emerged
Twitter employees also rushed to support him, using the hashtag #WeBackJack
Instead, chairman Omid Kordestani and lead director Patrick Pichette attended the meeting.
According to Bloomberg’s sources, Singer believes Dorsey has become distracted.
Among concerns are that he has mentioned spending six months of the year in Africa.
He has also been slow to launch new products with Twitter.
The company’s thousands of employees – who have all been told to work from home as the panic from the global spread of coronavirus sets in – have however leaped to Dorsey’s defense.
Trump has regularly blasted Twitter, accusing it – along with Facebook and Google – of political bias against conservatives and even suggesting the platforms had tried to rig the election.
He has also repeatedly threatened to investigate or regulate them.
Paul Singer, the founder of Elliott Management Corporation, wants Dorsey out, according to sources close to discussions
In July, he called on Congress to pass legislation that would clamp down on the firms and said Twitter should be fined for engaging in ‘possible illegal’ activity.
It remains to be seen what impact a Republican Trump supporter stakeholder will have on the social media platform’s future political stance.
Singer wouldn’t be the first stakeholder to have voiced concerns over Dorsey’s leadership.
In December, Scott Galloway, a professor of marketing at New York University’s Stern School of Business and an investor in Twitter, wrote a letter calling for Dorsey to be replaced at the helm.
‘To be clear, my primary objective is the replacement of CEO Jack Dorsey,’ Galloway said in an open letter to 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.’
Since Dorsey returned as CEO in July 2015, Twitter’s shares have tumbled by 6.2%.
He had been at its helm since 2006 but left in 2013 after a series of corporate shake-ups and rumors of leadership turmoil.
When he returned in 2015, his image had drastically changed from that of a polished CEO to a bearded leader who often wears hoodies.
He gave a third of his Twitter stock, which equates to 1 percent of the company, back to employees in 2015 and also gave 10 percent of his stock to Square.