Twitter will let Egon Durban, the co-CEO of Silver Lake, keep his board seat even though shareholders turned down his reelection at the company’s annual meeting this week. Durban’s time on the board pre-dates Elon Musk’s arrival, dating back to an earlier entanglement with another unsolicited investor. But, in the past, Durban has been a close Musk confidant, and the company’s decision to keep him is a reminder of the complex machinations—and personalities—involved in the highly public fights over Twitter’s future during the last several years.
Twitter believes Durban lost the election because of a shareholder advisory firm’s recommendation against him, not because of his relationship with Musk, the company says in a new SEC filing. That firm, ISS, recommended Twitter shareholders reject him in the meeting on Wednesday because Durban’s got a lot going on. He sits on a total of six corporate boards. In a new agreement with Twitter, he promises to cut back on those demands for his time by leaving…one of the other boards, vowing not to serve on more than five boards in the future.
The filing also makes it seem like Twitter worried Durban’s departure might violate its agreement with Elliott Management, the activist-investing firm that bought a stake in Twitter 2020. Or possibly at least irritate Elliott, a one-time adversary Twitter labored to appease. In 2020, the company struck a wide-ranging deal with Elliott to get it to call off its campaign against Twitter and then CEO Jack Dorsey. Among the provisions, Elliott won several board seats, one of which went to Durban/Silver Lake. The last thing Twitter wants to do right now is antagonize Elliott and possibly have them get involved somehow in the Musk buyout. And what a mess that’d be.
“The Board considers Mr. Durban a highly effective member and believes that he brings to the Board an unparalleled operational knowledge of the industry, a unique perspective, and an invaluable skill set and experience with mergers and acquisitions,” Twitter says in a new SEC filing. Durban’s Silver Lake is a massive tech-focused private equity firm with nearly $90 billion in assets under management. It has done things like help fund Michael Dell’s 2013 leveraged buyout of his PC company—as well as counsel Musk around his plans to privatize Tesla in 2018, the concreteness of which remains an unanswered question. (Musk, of course, now says he may possibly buy Twitter, possibly for $44 billion.)
Here’s Twitter continuing to give Durban high marks on his report card: “The Board noted that Mr. Durban has strengthened its ability to oversee the Company’s long-term value creation strategy and effectively govern its implementation. Further, Mr. Durban is consistently well-prepared, engaged and a meaningful contributor to Board meetings and discussions.”
A little bit now abut the ins and outs of board elections and shareholder votes. It might’ve seemed like Twitter’s shareholders would get the final through their votes at the annual shareholder meeting. Nope! That’s not the case. “And it’s not uncommon,” says Ann Lipton, a dean at Tulane’s law school and a former corporate attorney. Twitter and other business have set up their governance rules so a director must offer resign if he or she doesn’t win the majority of the votes for reelection. “But the board has the discretion to refuse the resignation, which it did in this case,” Lipton explains.
So what Twitter is trying to tell us here is this: Durban’s loss has nothing to do with shareholders feeling uncomfortable with his relationship to Musk. Nothing! It’s all because of the unfair, meddlesome comments by ISS. Durban’s cutting back on his commitments—everything’s good.
Twitter is also underscoring Durban’s importance to the company. (Too important to leave his status up to you, well intentioned but misled shareholders!) In reality, he’s probably never been more important to Twitter than right now, since Twitter still hopes to finish selling itself to Musk, who has cast doubt on whether he’ll finish the deal. If you’re the board, and you’ve got to try to keep negotiating with Musk, who seems most favorably labeled as “mercurial,” you probably want a conduit to him like Durban available. Which probably makes the entire thing about Musk.