(FiveNation.com)- This weekend, Elon Musk blasted Twitter’s board of directors after it came to light that the company’s board owns very little stock in Twitter.
In a tweet on Saturday, Laskie.com founder Chris Bakke posted a screen capture listing the board members and the percentage of stock they own in Twitter. Putting aside founder Jack Dorsey, who owns 2.253 percent of Twitter’s stock, Twitter’s board of directors all own less than 0.1 percent of the company.
Musk replied to the tweet noting that the “economic interests” of the Twitter board “are simply not aligned with shareholders.”
In another tweet, Musk agreed with entrepreneur David Sacks’ tweet that an outright rejection of Musk’s purchase offer would expose Twitter’s corruption. Sacks said, “if the game is fair, Elon will buy Twitter.” But if it is “rigged,” there will be a reason why he isn’t able to, adding “we’re about to find out how deep the corruption goes.”
Musk replied, “Indeed.”
It was reported on Friday that the board adopted a limited-term shareholder rights plan (AKA a “poison pill”) making it harder for Musk to acquire the company.
This “poison pill” gives shareholders the right to acquire more shares in Twitter at a steeply reduced price, thereby diluting Musk’s stake in the company. The provision will be triggered if an investor attempts to purchase more than 15 percent of the company’s shares.
According to the New York Times, a “poison pill” was devised in the 1980s to shield companies from “corporate raiders.” It allows a company targeted for a takeover to “flood the market” with additional shares or allows the other existing shareholders to purchase shares at a discount.
The move may not stop Musk entirely, but it could make it more expensive for him to buy Twitter or force him to negotiate with Twitter’s board of directors.
In its statement announcing the move, the board claimed their “rights plan” will reduce the chance of an entity or person gaining control of the company “through open market accumulation without paying all shareholders an appropriate control premium.” The provision is also intended to provide the Twitter board “sufficient time” to make an informed decision and “take actions that are in the best interests of shareholders.”
