Twitter has struck a deal to keep Jack Dorsey as the company’s CEO, staving off an attempt from an activist fund led by a major Republican donor to kick him out.
The activist fund, Elliott Management Corp., has been pushing for Dorsey’s ouster following two years of relative stagnant stock growth at the social media company. According to The Wall Street Journal, the activist fund amassed a roughly $1 billion stake in Twitter, giving it the power to nominate new directors to the company’s board.
But on Monday, Twitter announced it had secured a new source of investment. Silver Lake Partners, a private equity firm, is buying $1 billion of the social media company’s stock, and the firm wants to keep Dorsey as CEO.
"Twitter serves the public conversation, and our purpose has never been more important,” Dorsey said in a statement. “Silver Lake's investment in Twitter is a strong vote of confidence in our work and our path forward.”
Elliot Management is led by Paul Singer, a Republican Party donor, so his company’s attempt to push out Dorsey has raised questions over whether he might push Twitter into a more politically conservative direction. Singer himself largely refrained from donating to President Trump, one of the biggest critics of Twitter. Nevertheless, Republicans across the party have previously blasted the social media platform over claims its discriminating against conservatives.
That said, Elliot Management hasn't been the only investor to call for Dorsey's dismissal. In December, marketing professor and Twitter shareholder Scott Galloway also penned a public letter calling for the social media company to kick out Dorsey, citing sagging stock growth. “Twitter has, on every metric, underperformed peers for several years. Since Mr. Dorsey’s return to the firm in July 2015, shareholder return is –15 percent, vs. Google +153 percent, Facebook +129 percent,” Galloway wrote.
Not helping the matter was how Dorsey originally planned on spending three to six months in Africa this year—away from Twitter’s headquarters in San Francisco—before reconsidering in response to the coronavirus outbreak. As a result, Elliot Management demanded Twitter appoint a new full-time CEO, according to the Journal.
So don’t be surprised if investor-led attempts to oust Dorsey reignite if the company’s stock remains flat. In the meantime, Twitter has agreed to appoint two executives, each from Elliott Management and Silver Lake, to the company’s board. Twitter also plans on using the $1 billion investment from Silver Lake to eventually buy back $2 billion in company shares.
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