Elon Musk could not own a majority stake of Twitter if he joined company’s board

UPDATE (4/14/22): According to a letter dated April 13 sent by Elon Musk to Twitter and filed to the SEC, Musk has offered to buy the remainder of Twitter's shares at $54.40 per share. In a separate SEC filing, the Vanguard Group revealed it had increased its share in Twitter to 10.29% by March 31. That would make the Vanguard Group Twitter's largest shareholder — not Musk.

UPDATE (4/10/22): On April 10, Twitter CEO Parag Agrawal announced that Elon Musk would no longer be joining Twitter's board. The cap on Musk's shares would no longer apply if he does not join the company's board. The article continues as published below.

On April 4, the richest man in the world, Elon Musk, purchased 9.2% of Twitter’s shares, enough to make him the company’s top shareholder. Twitter then appointed Musk to its board of directors.

Following the news, Musk tweeted a poll asking if users wanted an edit button on Twitter, and people in the replies requested changes to the website’s moderation policies.

Others on social media, including Rep. Marjorie Taylor Greene (R-GA), claimed Musk is now a majority shareholder of Twitter, and suggested he could directly influence Twitter's policies.

THE QUESTION

Is Elon Musk now the majority shareholder of Twitter? 

THE SOURCES

• Securities and Exchanges Commission (SEC) filings
• Twitter CEO Parag Agrawal

THE ANSWER

No, Elon Musk is not the majority shareholder of Twitter and he cannot own a majority stake so long as he is serving on its board.

WHAT WE FOUND

Securities and Exchanges Commission (SEC) filings confirm Elon Musk bought 9.2% of Twitter’s stock on March 14, 2022. That’s stock worth more than $3.7 billion, based on Twitter’s closing price of $50.98 on April 5. According to online databases of Twitter’s shareholders, corroborated by Twitter SEC filings, that makes Musk Twitter’s top shareholder. The next two largest shareholders, Vanguard Group and Morgan Stanley, each hold between 8.5% and 9% of Twitter’s shares.

The largest shareholder of a company owns more shares than any other single shareholder in the company. To become a majority shareholder, a person would need to own more than 50% of the company's shares.

The SEC filing states Musk has a “voting power” of 73,486,938 — equal to the number of shares he owns in the company – or about 9.2% of the votes in shareholder decisions. More shares equals more voting power, and therefore more influence over the social media company’s direction. If Musk owned the majority of shares, his vote alone could determine the company’s fate.

On April 4, Twitter CEO Parag Agrawal announced that Twitter was appointing Musk to its board of directors. This was confirmed by a letter between Musk and Twitter that both parties signed and submitted to the SEC which states his current term on the board expires in 2024.

A different SEC filing states that as part of the agreement, Musk cannot, either alone or as a member of a group, become owner of more than 14.9% of the company’s stock while serving on the board and for 90 days thereafter.

That means that Musk cannot own a majority share of the company until sometime in 2024 at the earliest. His term expires after the company’s annual meeting of stockholders that year; this year’s meeting is in May. Should the meeting occur in May 2024, he wouldn’t be able to acquire 15% or more of Twitter’s stock until August 2024 at the earliest.

So Musk won’t be able to unilaterally decide to add an edit button, change Twitter’s moderation policies or any other change he wishes Twitter to make. He will just have some influence over such decisions as a member of its board.

Musk may remain on Twitter’s board beyond 2024. Unless he and Twitter come to a new agreement with different terms, he would be prohibited from acquiring a larger interest in Twitter for as long as he remains on the company’s board.

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