* Nat Rothschild's Twitter insult becomes a global story
* Shows power of social media to generate publicity
* But CEOs wary of blunders; many shun social networks
LONDON, April 2 (Reuters) - When Nat Rothschild, the co-founder of troubled miner ARMS, insulted his former investment partner on Twitter last week, he showed the power of social media for business leaders seeking publicity - but also the perils of saying the wrong thing.
"Whilst your dad is an evil genius," the scion of the Rothschild banking dynasty tweeted to Aga Bakrie, "the word on the street is that you are extremely DUMB."
The tweet made the front pages of media around the world as journalists, used to the measured language of corporate press releases, seized on a seemingly unguarded remark showing that even powerful businessmen can descend to playground taunts.
For Rothschild, the publicity was a welcome opportunity to revive interest in his long-running campaign against Indonesia's influential Bakrie family, whom he blames for a plunge in the value of ARMS' predecessor company. Within 24 hours, his number of followers on Twitter had jumped to 1,700 from 200.
But not all business leaders have been so fortunate with their apparently off-the-cuff remarks on social media.
Last year Michael O'Leary, boss of budget airline Ryanair , was denounced by one Twitter user as a "sexist pig" after he tweeted: "Nice pic. Phwoaaarr!" to a woman, whose image was shown during a live question and answer session.
The former chief executive of Britain's Co-operative Group , meanwhile, laid open the divisions within the company in March when he accused one or more board members via Facebook of being "determined to undermine me personally" after his pay package was leaked to the press. He resigned a few days later.
Even Twitter boss Dick Costolo has got into hot water on the social media site, comparing academic Vivek Wadwha to over-the-top U.S. comedian Carrot Top, after the professor was quoted as saying Twitter's board lacked diversity.
Little surprise then that research last year by CEO.com and Domo found 68 percent of Fortune 500 chief executives were not on any social network. Company bosses on Twitter are on the increase, up more than half from 2012 to 2013, but the number remains small with just 28 out of top 500 CEOs on the site.
For many chief executives, the risks are just too high.
"Unless you're happy for something to appear on the front page of a newspaper or on a newswire you shouldn't really tweet it," said Mary Whenman, managing director of corporate, financial and public affairs at PR agency Weber Shandwick.
While a dangerous platform for plain-speaking chief executives, social media has been used more effectively by activist investors looking to drum up support for a campaign.
Billionaire investor Carl Icahn, for example, used Twitter for months to urge Apple to buy back more shares, before the technology group eventually proposed in February a $14 billion stock repurchase programme.
Nat Rothschild himself, while insisting his outburst against Aga Bakrie was "instinctive", concedes he joined Twitter a few weeks ago for "strategic reasons."
"I'm interested in Indonesia and my investments, one of which has a serious litigation component to it, and in that respect I want to make sure people continue to focus on the situation," he told Reuters.
Although announcing market moving news over Twitter has been allowed in the United States since last year, it is off limits in Britain, where it must first go though a regulated channel.
But Twitter allows businesses to jump into a moving news story and respond to events immediately.
"You can see how slow it is to use traditional emails and press release distribution systems," said Rory Godson, founder of communications agency Powerscourt, who suggested to Rothschild he should join Twitter.
"It is definitely not suitable for everyone ... but for Nat in this case it enables him to respond very quickly and it also enables him to build global support."
KNOW WHEN TO STOP
Some business leaders do make it work.
Rupert Murdoch and Richard Branson are both seen within the communications industry as masters of moving minds with 140 characters or less, although they are protected by virtually unassailable positions within their own companies. Murdoch has around 500,000 followers on Twitter, and Branson four million.
Jeff Joerres, chief executive of staffing group Manpower who has over 7,000 Twitter followers, told Reuters the social network was an important way of giving big business a human face, though it was essential to know the boundaries.
"You've got to put a bit of personality and imagination into it, but not go overboard," he said. "It's my personal account, but at the same time it is not - I'm speaking as the company."
One executive to have won plaudits for his use of Twitter is Paul Pester, boss of Britain's TSB Bank, who jumped on to the social network in January to respond to complaints after thousands of cash machines failed. His personal tone in apologising and offering advice helped to manage the crisis.
For Whenman at Weber Shandwick, social media now has to be seen as part of being a CEO. "In the same way a chief executive of any FTSE 100 company needs to do media interviews, needs to go into analyst briefings, they also now need to have a social media profile. It's a normal part of business life," she said.
Manpower's Joerres said Twitter, like drinking, was just a matter of knowing your limits.
"People only need to worry about it if they do something stupid," he said. "I go to bars and don't worry about it. You only go to bars and worry about it if you think you are going to do something stupid when you are drinking."
(Additional reporting by Ben Hirschler; Editing by Mark Potter)