Activist hedge fund Elliott Management has laid out concerns over Twitter’s corporate governance to the social network’s board and is pushing for the removal of its chief executive Jack Dorsey after taking a stake worth more than $1bn in the social media company.
The New York-based fund has taken issue with Mr Dorsey simultaneously holding the CEO title at both Twitter and Square, the fintech company he also co-founded, according to people familiar with the matter.
Elliott, whose holding of more than 4 per cent in Twitter places it among the company’s top 10 shareholders, has had talks with the board and has privately submitted four nominees to stand for election at the company’s annual shareholder meeting to be held in May.
The $38bn firm has flagged leadership issues with Twitter’s board of directors, said people familiar with its thinking, stemming from a CEO it believes is distracted with other activities and a high turnover rate among senior operating and financial executives.
Twitter’s board named Mr Dorsey chief executive in 2015 despite publicly stating that it would only accept a candidate that could do the job full-time. Mr Dorsey has remained at the helm even as investors have flagged concerns that he has more skin in the game at Square, a company that is more valuable than Twitter and in which he owns a 13 per cent stake.
Shares in Twitter dropped by a fifth in October after the company reported a poor third quarter, marred by technical problems in its advertising placement technology. The company’s shares trade just 25 per cent higher than its 2013 IPO price and have been lapped by rival Facebook whose market cap of more than $500bn is 20-times that of Twitter.
The 43-year-old Mr Dorsey raised eyebrows last year when he announced plans to move to Africa for as long as six months in 2020 to explore opportunities in blockchain and digital currencies. Mr Dorsey owns more than a tenth of Square, a stake worth nearly $5bn. In contrast, his Twitter stake of roughly 2 per cent is worth around $500m.
Mr Dorsey did not immediately respond to a request for comment. Twitter declined to comment.
Twitter recently announced that its monthly user growth accelerated by more than 20 per cent in the fourth quarter. But the company has not consistently converted users into advertising revenue and Elliott believes leadership changes can close the gap.
High-profile events such as the 2020 US presidential election, the Tokyo Olympics and the coronavirus outbreak are expected to drive user interest in breaking news, and Elliott has expressed concern that the company may not be able to effectively turn engagement into advertising dollars.
The hedge fund is perhaps the most feared activist investor in the world having taken on such titans as AT&T, eBay and Samsung. Elliott has not yet gone public with its Twitter campaign, hoping that its behind-the-scenes campaign would push the company to act.
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March 02, 2020 at 01:30AM
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Elliott pushes for big changes at Twitter after taking $1bn stake - Financial Times
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