Twitter (TWTR) - Get Report CEO Jack Dorsey should remain at the helm of the social media platform, despite his unconventional management style and his overseeing a separate company, according to an independent panel of Twitter's leadership.
The independent panel, formed to review Twitter’s C-Suite and leadership structure as part of March agreement with activist investor Elliott Management and private-equity firm Silver Lake, which each took stakes in Twitter earlier this year, filed its recommendations on Monday.
The panel, which included representatives from both Elliott and Silver Lake, concluded that the current management structure is sufficient, and that Twitter’s board accept the recommendation, according to the filing.
The endorsement follows last Wednesday’s hearing of the Senate Commerce Committee that was supposed to focus on a decades-old legal shield insulating tech companies from liability over what users post, but left Dorsey as well as Facebook’s (FB) - Get Report Mark Zuckerberg and Google’s (GOOGL) - Get Report Sundar Pichai defending themselves against allegations that their companies and employees are biased against conservatives.
“The committee expressed its confidence in management and recommended that the current structure remain in place,” the filing said. “The board will continue to evaluate company and management performance according to a range of factors, including the company’s operating plan and established milestones.”
Shares of Twitter traded higher following the report.
The decision is an endorsement of Dorsey and his seemingly unconventional, hands-off management style, as well as the equally unconventional approach of holding a second full-time CEO job at Square (SQ) - Get Report, the publicly traded payments company he also co-founded.
The committee also proposed reducing the terms of Twitter’s directors to one year from three. Shareholders will be asked to approve a change to the company’s bylaws, putting directors’ terms at one year beginning with each election after the 2021 annual meeting, according to the filing.
That could ultimately make it easier for outside investors like Elliott to replace board members down the road and take a larger stake in the company. Unlike Facebook FB and Snap SNAP, Twitter has one class of stock, meaning Dorsey doesn’t have the protection of super-voting shares to stop outsiders from gaining board influence.
The board also accepted the committee’s work to update “the CEO succession plan in line with best practices.”
Separately, both Twitter and Facebook on Monday labelled as "misleading" an election eve post by President Donald Trump claiming mail-in ballots in the key state of Pennsylvania would lead to "rampant" fraud and street violence.
The U.S. Supreme Court ruled last week to allow mail-in ballots in the swing state to be counted up to three days after the actual election night on Nov. 3.
"The Supreme Court decision on voting in Pennsylvania is a VERY dangerous one. It will allow rampant and unchecked cheating and will undermine our entire system of laws," Trump said in a post on both Twitter and Facebook.
"It will also induce violence in the streets. Something must be done!"
Twitter marked the post with a content warning that said: "Some or all of the content shared in this Tweet is disputed and might be misleading about an election or other civic process."
Shares of Twitter were up 5.67% at $41.72 in trading on Tuesday.