Reformer pitches Musk trendy "public benefit" structure for Twitter

Illustration shows Elon Musk image on smartphone and printed Twitter logos
An image of Elon Musk is seen on a smartphone placed on printed Twitter logos in this picture illustration taken April 28, 2022. REUTERS/Dado Ruvic/Illustration

May 4 (Reuters) - A prominent corporate reformer is pitching a trendy idea to Elon Musk as he takes control of Twitter Inc: turn the social-media platform into a "public benefit corporation" to work for the benefit of all stakeholders, not just investors.

Adopting the legal structure would be one of several ways to ensure that Twitter (TWTR.N) serves the public interest, even if Musk eventually sells the company again or loses control, said Rick Alexander, CEO of The Shareholder Commons.

"If you want a company to be more responsible, a PBC is an enabler," said Alexander in an interview. Other ideas his nonprofit advocacy group plans to outline in a letter to Musk and to top Twitter investors on Wednesday include setting rules to protect Twitter's transparency and to create an independent trust to enforce those procedures.

Once Twitter is taken private, Alexander said, "all the pressure that you might feel from public shareholders to maintain a healthy online discourse will go away."

A representative for Musk did not immediately respond to a request for comment.

After inking a deal to buy Twitter for $44 billion last week, Musk said he wanted to enhance the platform with new features, make its algorithms open source to increase trust, defeat spam bots, and authenticate all humans. read more

Musk has called himself a "free speech absolutist" and criticized Twitter's content moderation policies. Civil society groups have called on Twitter's top advertisers to uphold previous steps Twitter has taken against content like harassment.

A former corporate lawyer, Alexander became well-known as a leader of B Lab, which certifies companies as meeting social and environmental standards.

"Public Benefit Corporations" are a formal structure increasingly used by companies when they incorporate to clarify how boards can prioritize the interests of stakeholders like workers and communities as well as traditional equity shareholders. read more Examples include glasses maker Warby Parker Inc and Veeva Systems Inc (VEEV.N).

Some investors may be considering rolling over their stake as Musk said he would like to keep as many of them as possible as he takes the company private.

"Ensuring that Twitter is a positive social force long into the future is much more financially material to shareholders than receiving a premium for their shares today," the Shareholder Commons letter said.

Reporting by Ross Kerber. Additional reporting by Svea Herbst-Bayliss, Editing by Chizu Nomiyama

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