It appears that Twitter Inc's (NYSE:TWTR) board of directors is contemplating a major reshuffle that could ultimately leave former CEO Dick Costolo out of the company's management once and for all according to a recent report published on Bloomberg. It is likely that such a shakeup would be made public once the company appoints a permanent CEO. At present the Twitter co-founder who also happens to be CEO of Square is simultaneously leading the micro blogging service on an interim basis.
Sources close to the matter as cited by Bloomberg said that the move comes as part of a broad strategy to add more diversity. Under the restructuring process Twitter may add new directors, that come from varying backgrounds in terms of both ethnicity and work experience. In addition to this the shake up may also take into account the fact that currently three of Twitter's directors have previously served as the CEO. These include Jack Dorsey, Evan Williams and Dick Costolo. The mere presence of these three individuals on Twitter's board may be an issue for the new CEO as he tries to run things.
However it may take a while before Twitter puts such a plan into effect, especially considering that the company hasn't provided any update with regards to its CEO search. The uncertainty surrounding Twitter's leadership prospects going forward has taken a serious toll on both the company's employees and investors. Earlier this week Twitter stock for the very first time in over a year went below $30. Since then the stock hit a series of all-time lows and has settled near its IPO price of $26.
Analysts have argued that Twitter should keep in mind that in order to retain shareholder confidence or at least what is left of it, the company should not only be prudent in picking a CEO, but should do this without much delay. SunTrust analyst Robert Peck recently noted that instead of wasting time in finding a 'Unicorn CEO", Twitter should appoint Mr. Dorsey on a permanent basis with current revenue head Adam Bain serving as president and Evan Williams as chairman. Mr. Peck stated that all this three individuals are well-versed with the company's product's and are highly regarded by both investors and Twitter's workforce.
Early Twitter investor Chris Sacca more or less backed the idea of Jack Dorsey being appointed as the permanent CEO of the company. While bears would argue that Mr. Dorsey will not be able to give commitment to Twitter on a full time basis because of he is alrady CEO of Square, the fact that he chose to focus on Twitter's long-term issues during the earnings call instead of the quarterly results that were ahead of estimates indicates otherwise. Mr. Dorsey had blatantly told investors to not expect a meaningful increase in Twitter's audience. As such while it will only be for the best if Twitter adds outsiders to its board that belong to complementary industries such as media, advertising and e-commerce, the company should make sure that it retains key insiders such as Jack Dorsey . This would allow Twitter to tackle its problems with audience growth from different angles.
The past few months have been difficult for Twitter Inc. (NYSE:TWTR), as the company struggles to maneuver through a tirade of issues that have proven to be a burden on its stock price. This week alone, Twitter stock hit a consecutive 52-week low, trading near its IPO price of $26. Earlier this week, the stock fell below $30 for the first time in over a year. The sharp sell-off came right after the company's earnings call for the second fiscal quarter.
Although Twitter's results were ahead of analysts' estimates, the company's interim CEO Jack Dorsey, and CFO Anthony Notto warned investors to not expect a meaningful growth in overall user base. Additionally, Twitter's search for a permanent boss has reportedly reached a stalemate. As such, it is a no-brainer as to why the workforce morale at Twitter has reached rock-bottom.
According to a recent report on Business Insider, the ongoing situation has left many executives within the company frustrated. One may see this to be the reason why CFO Anthony Notto is the only Twitter senior executive who bought TWTR shares in 2015. The primary driver behind decreasing employee confidence is perhaps the uncertainty surrounding the company going forward. Certain employees approached by Business Insider noted that while Jack Dorsey stressed on issues the company was facing, he didn't provide a clear strategy as to how they will be dealt with.
Most employees are as much in the dark as shareholders, when it comes to the "turnaround strategy" Jack Dorsey referred to, during the earnings call. In staff meetings, Mr. Dorsey has reportedly stressed on the dire need to take serious action, in order to deal with Twitter's ongoing problems. "But what those actions are, or what the vision is, wasn't immediately communicated to the group," an employee told Business Insider. One employee even noted that Mr. Dorsey, in terms of strategy, hasn't brought anything new to the table, since he came back to take Twitter to the "promised land."
The leadership vacuum is another thing that has taken an immense toll on Twitter employees. Certain analysts, in the past few weeks, have been very vocal in their criticism of Twitter's ongoing CEO search, with many of them deeming it a search for a "Unicorn CEO." SunTrust analyst Robert Peck, in a recent research note, stated that the company should appoint a three-man executive team to lead Twitter, instead of wasting its time on finding the right person with limitless golden attributes. This would include Jack Dorsey as CEO, Adam Bain as COO, and Evan Williams as Chairman of the Board. As such, the analyst has stressed that Twitter's management should be both prudent and quick in its CEO search.
Aside from this, the ongoing mass exodus of several key executives has also been difficult to manage. Several employees have complained about adjusting to new managers quite a few times during a small time-span. Of 13 executives who were leading Twitter up until last year, eight currently serve the company. It is likely that employees are generally fed up of focusing on a cause they are hardly in touch with.
Source: Twitter Inc (TWTR) Eyes Major Changes To Board; Dick Costolo Could Make Exit
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