Elon Musk Threatens To Drop Twitter Board Member Salaries To $0 If Takeover Bid Succeeds

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Tesla and SpaceX CEO Elon Musk’s bid to buy Twitter becomes more complicated and interesting by the day. The last few days in particular have only deepened the battlelines between Musk and Twitter’s board. Musk has threatened to reduce Twitter’s board member’s salaries to $0 if he successfully purchases Twitter.

Elon Musk remarked on Twitter, “Board salary will be $0 if my bid succeeds, so that’s ~$3M/year saved right there.” Twitter currently gives board members about $2.9 million USD in cash and stock awards. Each board member earns a salary between roughly $250,000 and $350,000 a year for what amounts to part-time work. Not too shabby.

Musk is deeply critical of the board’s motivations. He has pointed out that once Jack Dorsey leaves Twitter’s board at the end of May, the board will only collectively own less than 3% in shares. Musk contends that the board’s “economic interests are simply not aligned with shareholders.” He furthermore posted a poll on Twitter which asked whether or not the shareholders should be the ones to determine if Twitter will go private. Those who participated in the poll overwhelmingly voted to allow the shareholders the choice.

Musk’s comments were posted after Twitter’s board unanimously adopted a “poison pill” last Friday. The poison pill is a limited shareholder’s rights plan. Shareholders would be able to purchase Twitter stocks at a discounted price should any person or entity purchase more than 15% of Twitter’s outstanding stocks without the board’s approval. This type of strategy is often employed to avoid a hostile takeover.

Twitter’s board may have been responding to fears that Musk would find another way to take Twitter private. Musk had tweeted on Friday the song lyrics “Love Me Tender.” This may have been a reference to Elvis Presley but many theorize that Musk was going to attempt a “tender offer.” A tender offer is when a person or entity purchases some or all of shareholders' stock. Twitter’s poison pill would therefore prevent any kind of tender offer, at least for the next year.

It is unclear at the moment whether or not Musk will be able to purchase and privatize Twitter. What is clear is that neither Musk nor Twitter’s current board will give in without a fight. Musk will need to get creative if he wants to “transform” Twitter.