Twitter’s Jack Dorsey survives scrutiny from activist investor

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Jack Dorsey’s job as CEO of Twitter Inc. appears safe.

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Twitter said in a securities filing on Monday that a board committee formed this spring recommended that the current management structure remain in place. The announcement gives Mr. Dorsey a reprieve after his leadership of the company drew scrutiny earlier this year from Elliott Management Corp., which is known as one of Wall Street’s toughest activist investors.

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The filing said the committee is also suggesting changes to Twitter’s board structure, which would give investors more say, and that it would continue to evaluate management’s performance.

Twitter and Elliott reached an agreement in March in which the company agreed to appoint two board members and commit to $2 billion in share buybacks. The agreement also included the formation of the new committee to study Twitter’s leadership, which effectively created a probation period for Mr. Dorsey to prove himself to the new investors.

The committee was led by Patrick Pichette, Google’s former chief financial officer who earlier this year was named Twitter’s lead independent director. Jesse Cohn, Elliott’s head of U.S. equity activism, and Egon Durban, co-CEO and managing partner of Silver Lake, also served on the committee.

Silver Lake made a sizable investment in Twitter earlier this year.

WHO IS JACK DORSEY?

Twitter had previously said the new board committee would announce its findings before the end of the year. Representatives for the company and Elliot declined to comment.

Mr. Dorsey splits his time between Twitter and Square Inc., a financial technology company he also co-founded and that he also serves as CEO. His split duties have raised questions about his ability to suitably focus on the issues facing Twitter, where he’s often been a more hands-off leader than some of his peers around Silicon Valley.

TickerSecurityLastChangeChange %
TWTRTWITTER INC.39.47-1.89-4.57%

Since Elliott began scrutinizing Twitter in late February, the company’s stock has risen about 20%. Twitter has grown its userbase about 23% since the fourth quarter of 2019, outstripping its pledge earlier this year to increase the user base more than 20% this year and beyond.

Both of those figures were trending higher before last week, when Twitter posted its slowest user growth in years. Twitter shares dropped 21% the day after it reported earnings.

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Mr. Dorsey’s next major test is Twitter’s handling of the election.

In late October, Twitter faced scrutiny from lawmakers for the company’s decision to block users from sharing links to a pair of New York Post stories about Joe Biden’s son, Hunter Biden. Mr. Dorsey’s arm’s-length leadership meant he wasn’t involved in the initial discussions about that move, The Wall Street Journal previously reported.

Mr. Dorsey’s oversight of Twitter has drawn criticism from lawmakers. In a hearing about content moderation in late October, Sen. Ted Cruz (R., Texas) asked Mr. Dorsey: “Who the hell elected you and put you in charge of what the media are allowed to report?”

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Twitter has said it prepared extensively for the coming election and Monday announced updated policies that the company said would facilitate debate while protecting the integrity of the vote. Those updates include plans to label any post by a candidate that makes preliminary claims about election results. The policy will also apply to U.S.-based accounts with more than 100,000 followers and tweets that get significant re-engagement on the platform.

Write to Georgia Wells at [email protected]

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