Twitter announced an agreement with activist investor Elliott Management on Monday that — at least for now — averts a battle over CEO Jack Dorsey’s leadership of the social media giant.
Under the agreement, Elliott executive Jesse Cohn, who had been the driving force behind the hedge fund’s campaign to replace Dorsey, will get a seat on Twitter’s board and on a new board committee that, according to a news release, will “evaluate the CEO succession plan with the CEO.”
“We invested in Twitter because we see a significant opportunity for value creation at the company. I am looking forward to working with Jack and the board to help contribute to realizing Twitter’s full potential,” Cohn said.
Twitter also said private equity firm Silver Lake will invest $1 billion in the company, with managing partner Egon Durban also being appointed to the board and the new committee.
“We are deeply proud of our accomplishments and confident we are on the right path with Jack’s leadership and the executive team,” Patrick Pichette, Twitter’s lead independent director, said. “As a board, we regularly review and evaluate how Twitter is run, and while our CEO structure is unique, so is Jack and so is this company.”
Elliott launched its effort to remove Dorsey as CEO after he announced plans to temporarily move to Africa while running both Twitter and payments firm Square. “Dorsey is the only person to lead two public companies with market valuations greater than $5 billion as CEO,” CNBC noted.
Elliott had nominated four candidates for Twitter’s board last month but according to The New York Times, it agreed to less sweeping changes after Pichette and Twitter Chairman Omid Kordestani argued that losing Dorsey would destabilize the company.
“But the settlement also lays the groundwork for eventually replacing Mr. Dorsey,” the Times said, noting that “Companies that Elliott has set its sights on [including eBay] have ended up replacing their chief executives after the hedge fund gained a board seat.”
Twitter said it expected to use Silver Lake’s investment to fund a $2 billion share buyback program.