Elliott Management and Twitter have agreed a ceasefire that will see Jack Dorsey keep his post as chief executive of the technology group, while the company prepares a $2bn share buyback programme partly funded by private equity firm Silver Lake.
But Mr Dorsey will come under greater pressure to justify his dual roles as chief of both Twitter and Square, with tougher performance targets in user and advertising growth and closer board scrutiny of his role.
Twitter’s shares were up 1 per cent in early trading on Wall Street on Monday, in the middle of a broader stock market fall driven by concerns about oil prices and the coronavirus outbreak.
Elliott, an activist hedge fund that owns a stake worth more than 4 per cent stake of Twitter, has named two directors to the company’s board: Elliott partner Jesse Cohn and Silver Lake co-chief executive Egon Durban. A third independent director that specialises in deep technology and artificial intelligence will also be added.
The share buyback will be funded in part by $1bn from Silver Lake, which will buy Twitter’s convertible bonds maturing in 2025, as well as by Twitter’s cash on hand. Silver Lake, which focuses on technology, has also offered to lend its consulting and advisory services to Twitter.
“Twitter serves the public conversation, and our purpose has never been more important,” Mr Dorsey said in a statement on Monday. “Silver Lake’s investment in Twitter is a strong vote of confidence in our work and our path forward.”
Mr Dorsey will remain as chief executive despite his leadership being a sticking point for Elliott. The activist had pushed for Mr Dorsey to be removed as chief executive, partly prompted by a high turnover rate among some senior operating and financial executives and by the entrepreneur’s plans to spend up to six months in Africa to explore opportunities in cryptocurrencies. Mr Dorsey later said he would reconsider the trip.
Twitter said a new five-person committee of directors would “build on the board’s regular evaluation of Twitter’s leadership structure”, including succession planning for Mr Dorsey.
The San Francisco-based company set new growth targets as part of the deal, including annual audience growth of 20 per cent or more, accelerating revenue growth and gaining market share in digital advertising.
Twitter’s advertising revenues grew 14 per cent last year to $2.99bn, a slowdown from the 24 per cent growth of the previous year. Smaller online advertising platforms such as Twitter have been squeezed in recent years as Google and Facebook have extended their dominance.
Twitter’s rank-and-file employees rallied behind Mr Dorsey last week, as did many in Silicon Valley’s tribal founder community, such as Elon Musk.
“I have enough flexibility in my schedule to focus on the most important things and I have a good sense of what is critical in both companies,” Mr Dorsey told the Morgan Stanley conference in San Francisco on Friday.
Additional reporting by Hannah Murphy