Elon Musk is joining the board of Twitter.
The company announced the appointment on Tuesday, one day after Mr. Musk revealed that they had bought a 9.2 percent stake in the social media Giant, a purchase that appeared to make him its largest shareholder. That news sent Twitter shares skyrocketing more than 20 percent on Monday.
Twitter’s stock opened nearly 8 percent higher on Tuesday after the news of Mr. Musk’s board appointment.
Mr. Musk is set to be appointed to a board seat that expires in 2024. For as long as he is serving on Twitter’s board, and for 90 days after if he chooses to step down, he will not be allowed to own more than 14.9 percent of Twitter’s stock.
“Through conversations with Elon in recent weeks, it became clear to us that they would bring great value to our board,” Twitter’s chief executive, Parag Agrawal, tweeted on Tuesday.
The filing detailing Mr. Musk’s investment on Twitter was dated March 14, which is the day he crossed the 5 percent threshold that requires regulatory Disclosure. They could have been building up his stake long before then.
“Looking forward to working with Parag & Twitter board to make significant Improvements to Twitter in the coming months,” Mr. Musk tweeted in reply to Mr. Agrawal.
Mr. Musk had been quiet about his intentions for the purchase of a big stake in Twitter, which was worth about $ 2.9 billion before it was disclosed but is now worth much more. He registered with the Securities and Exchange Commission via a document called a 13G filing, indicating that he planned for the investment to be passive and that he did not intend to pursue a larger role in the company.
Twitter’s announcement on Tuesday said that other than the agreement that he limit the size of his stake in the company, there were no “arrangements or understandings” between Mr. Musk and Twitter that led to his director role.
“It is theoretically possible” to join a board in a “passive monitoring capacity,” said Joshua Mitts, a professor of corporate law at Columbia Law School. But the presumption is that someone would join a board to effectively exert influence on the company, they said. “It doesn’t mean that you couldn’t try and convince the SEC otherwise, but I think it would be an uphill battle,” Mr. Mitts said.
Mr. Musk has criticized Twitter in recent weeks for failing, in his view, to adhere to free speech principles, and he has argued that users should be allowed to choose the algorithms that select the tweets they see or build their own, instead of relying on Twitter to curate posts.
The idea was one that Jack Dorsey, Twitter’s co-founder, championed while leading the company. “The choice of which algorithm to use (or not) should be open to everyone,” he said tweeted last month in response to a tweet from Mr. Musk pushing for open-source algorithms.
Mr. Dorsey stepped down as Twitter’s chief executive in November and plans to leave the company’s board when his term ends next month. Mr. Dorsey said Tuesday he was “really happy”About Mr. Musk’s joining the board.
On Monday, in one of his first tweets after his stake in Twitter was disclosed, Mr. Musk posted a Twitter poll asking users whether they wanted to be able to edit tweets, perhaps hinting that he wanted to influence features offered by the company.
“Do you want an edit button?” Mr. Musk asked on the site. Mr. Agrawal responded to his tweet with an apparent reference to an earlier poll by Mr. Musk about free speech: “The consequences of this poll will be important,” Mr. Agrawal wrote Monday. “Please vote carefully.”
As a director and major shareholder, it is not clear to what extent Mr. Musk will be able to influence policy decisions, like Twitter’s approach to content moderation and misinformation. When representatives from the activist fund Elliott Management and the private equity firm Silver Lake joined the board in 2020, they agreed to refrain from offering opinions on policy.
When asked whether Mr. Musk would be expected to abide by similar rules, a Twitter spokesperson said that while the board played an important advisory role, the site’s day-to-day operations and decisions would be by Twitter management and employees.