Twitter’s Board Owns Less Than 3% Of the Company

(PresidentialInsider.com)- Last week as the battle between Elon Musk and Twitter’s board of directors was heating up, Twitter users were aflutter over the news that Twitter’s board members own very little stock in the company.

Putting aside founder Jack Dorsey, who owns 2.253 percent of Twitter’s stock, Twitter’s board of directors all own less than 0.1 percent of the company.

When one Twitter user posted a screen capture of the Twitter board’s stock, Musk replied to the tweet noting that the “economic interests” of the Twitter board “are simply not aligned with shareholders.”

While Musk has a point, this isn’t uncommon.

Barron’s reported on Tuesday that, putting aside CEO Elon Musk, Tesla board members own very little stock in Tesla. While Musk owns 23.548 percent of Tesla’s stock, six of the eight board members own less than 0.1 percent. One board member, Oracle co-founder Larry Ellison, owns 1.548 percent of the company.

However, research shows that companies whose board members own more stock tend to outperform companies whose board members have less of a stake in the company. In that respect, Musk’s comments about Twitter are correct. When a board has skin in the game, they are more likely to put in the effort to make the company more successful and profitable.

At the same time, Barron’s notes, having “independent voices” serving on the board does have value as it offers a fresh perspective.

Barron’s also reviewed the ownership of other tech company boards of directors, including Mark Zuckerberg’s Meta, Apple, Salesforce, and PayPal. It found that in the majority of cases, the founders of the companies held a large stake while the others held below the company’s stock cap for board members.

For companies whose founders do not sit on the board, the total collective ownership is tiny. For example, the board of directors for PayPal holds a combined ownership of less than 0.1 percent of the company’s shares.

Considering this, Twitter’s low board ownership is pretty much in line with every other company. And while Elon Musk’s criticism is valid, it applies not just to Twitter, but almost every major tech company.