Twitter’s headquarters in San Francisco. Elliott has been in talks with Twitter management about its desire for the company to find a full-time CEO.
Photo: Michael Short/Bloomberg NewsElliott Management Corp. has nominated four directors to the board at Twitter Inc., according to a person familiar with the matter, setting the stage for a potential showdown between one of the most prolific and pugnacious activist hedge funds and the influential social-media company.
Elliott has taken a roughly $1 billion stake and been in talks with Twitter management about its desire for the company to find a full-time chief executive officer, the person said. That most likely would involve replacing co-founder Jack Dorsey, who began a second stint as the company’s CEO in 2015. In addition to his role at Twitter, Mr. Dorsey leads Square Inc., a financial-technology firm he also co-founded.
In November, Mr. Dorsey said via a tweet that he planned to live in Africa for three-to-six months this year. The announcement surprised executives at Twitter and angered investors frustrated with the company’s performance under the part-time CEO.
Twitter’s shares and financial performance have long lagged behind its popularity and influence in culture and politics. Its market capitalization, at around $26 billion, is a fraction of that of rival social-media platform Facebook Inc.
Elliott is known for battles with companies such as Arconic Inc. and AT&T Inc. and campaigns against Peru and Argentina, pressuring the countries to make payments on defaulted bonds. It recently revealed an interest in Japanese telecommunications-and-technology giant SoftBank Group.
At Twitter, at least for now, it appears to be trying to work with the company instead of waging a public campaign. The four directors were nominated before a recent deadline as a backup plan in case the talks fall through, the person said.
Bloomberg News earlier reported on Elliott’s push at Twitter.
Opening the door to Elliott’s campaign is the fact that Twitter doesn’t have the super-voting-share structure that insulates some other Silicon Valley companies from outside pressure.
Mr. Dorsey was Twitter’s first chief executive until he was pushed out in 2008 amid persistent technical glitches at the platform. He returned to Twitter in 2011 as executive chairman and product chief, with the company gearing up for its public listing in 2013. He was reappointed CEO in 2015, relinquishing the chairman role, while Twitter was grappling with modest growth at a time when rival social-media companies’ user numbers were exploding.
But Twitter continued to fall behind in the battle for users, hampering its ability to generate sales from advertising. Twitter now has 152 million daily average users, according to its latest quarterly figures. Facebook’s user base now tops 1.6 billion.
Mr. Dorsey has also failed to deliver consistent earnings growth and Twitter’s share price is little changed since he returned to the CEO role while Facebook’s stock has more than doubled during that period.
Twitter last year shocked investors when it said that technical glitches hampered its ability to sell ads in the third quarter, causing the stock to tumble.
The company reported record quarterly revenue for the fourth quarter, but it also warned investors that costs would continue to rise this year as it hires 20% more staff and works to fix ad software so it can offer metrics to advertisers without compromising user privacy.
Write to Corrie Driebusch at corrie.driebusch@wsj.com and Betsy Morris at betsy.morris@wsj.com
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Elliott Management Nominates Four Directors to Twitter’s Board - The Wall Street Journal
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