How can a stockholder with 11% have so much power?

[LAS14]

If I read the news correctly, Elon Musk has 11% of Twitter. So how come all the talk about what he's going to do with his power?

tia
las

[brooklynite]

1. I haven't seen any talk about what he's going to do with Twitter...

… except for People here who are convinced he’s going to restore Trump’s account.

Personally, I don’t think he’s going to do anything other than take in the dividends.

[WarGamer]

2. I thought it was 9.2%...

If he accumulates 50% plus one share he can fire the board, name himself CEO and do whatever he wants with Twitter including going Private

[zipplewrath]

3. Actually

One can tend to control a company with as little as 3 - 5% of the stock. Very few stock holders tend to vote. Of course if Musk were to piss off institutional share holders (pension funds, investment banks, etc.) they can band together and out vote him.

[LetMyPeopleVote]

7. I thought that Musk was under 10%

Musk does not want to deal with the Section 16B short swing profit rule

[iemanja]

4. He's not even on the board

Why do you think he has so much power? Did he do something?

[LetMyPeopleVote]

5. Elon Musk sued by investor over delayed Twitter filing

Elon Musk violated the federal securities laws by not filing a Schedule 13d timely. This can be a serious violation of the securities laws. You have to file a schedule 13d within 10 days after you own 5% or more of the stock of a public company. Back in the good old days of hostile public take overs, clients would time the filing to get the benefit of weekends and I am so old that I remember when these forms were filed on paper and not electronically. This will be a fun lawsuit to watch

Link to tweet

https://www.nbcnews.com/tech/tech-news/elon-musk-lawsuit-twitter-sued-sec-disclosures-rcna24138?cid=sm_npd_nn_tw_ma

Billionaire Elon Musk is facing a lawsuit following a week of headlines created by his purchase of 9.2 percent of Twitter's stock. An investor sued Musk on Tuesday and proposed a class-action lawsuit against him for not disclosing his purchase to the Securities and Exchange Commission sooner.

The plaintiff, Marc Rasella, said in the lawsuit filed in federal court in Manhattan, New York, that he lost money by selling shares of Twitter at “artificially deflated prices” because Musk waited beyond the mandated SEC deadline to disclose his stake.

Musk disclosed in an SEC filing on April 4 that he had bought shares representing 9.2 percent of Twitter, making him the largest outside shareholder of the company’s stock. The share price rose more than 27 percent after the news.

Rasella said in the lawsuit that Musk had an obligation mandated by the SEC to disclose his stake within 10 days of passing a 5 percent ownership threshold, a deadline that would have been March 24.

[LetMyPeopleVote]

6. Back in the good old days before poison pills, this would indicate a hostile takeover

Poison pills have mostly eliminated tender offers and hostile takeovers. Now the game is to acquire a stake and use that stake to do proxy battles to change control of the board. A 11% stake can cause problems in a proxy battle and there are M&A types who specialize in these contests. I will look later and see if twitter has a staggered board of directors

This could be fun to watch.

[LuckyCharms]

8. It depends.

11% is a significant percentage.

11% ownership gives that shareholder a louder voice, then say, a person who holds one share of a company. An 11% ownership means an 11% vote representation on matters are required to be put to a vote by the shareholders of a public company before the company can implement an action.

If the large shareholder can exert enough influence on the shareholder vote by making a case that the matter being voted on should be voted on in a certain way in order to increase a company's market cap, then that fact, coupled with an already existing 11% ownership, can have a huge influence on a company's overall shareholder vote on those matters.

As a result, large shareholders who express strong, sound, and rational arguments concerning the direction of a company's business plan can sometimes be awarded a seat (and possibly more than one seat) on the board of directors.

At that point, the large shareholder now becomes an important cog in the company wheel, and may be able to actually change the make-up of the existing board.

[Hoyt]

9. Because it's the largest block of shares, forming a base for aligning

with a few other large shareholders and voting out aboard members, etc.. It’s not necessarily a bad thing.