Elon Musk loses legal bid to evade severance payments to former Twitter executives.
Elon Musk faces a legal setback in his attempt to avoid severance payments to Twitter’s former top executives, fired during his 2022 takeover of the company. On Friday, a judge ruled that former CEO Parag Agrawal, along with other top executives, can proceed with their claims that Elon Musk terminated them right as the deal closed to avoid paying severance.
Judge rules against Elon Musk in Twitter executives’ severance claims
In a lawsuit filed in March, the executives argued that Musk intentionally cut them off before they could formally resign, denying them agreed-upon compensation. The suit also referenced a statement Musk made to biographer Walter Isaacson, revealing that Musk was eager to close the deal to avoid “a $200 million differential in the cookie jar between closing tonight and doing it tomorrow morning.”
Agrawal is joined in the case by Vijaya Gadde, Twitter’s former legal chief; Ned Segal, former CFO; and Sean Edgett, former general counsel, who all allege that they are owed one year’s salary plus unvested stock awards valued at the acquisition price.
Elon Musk faces multiple legal battles
This is not Musk’s first legal battle over employee compensation. After buying Twitter, which he rebranded as X Corp., Musk laid off thousands of staff as part of a massive restructuring. Many of those employees have filed claims for unpaid severance, alleging that Musk did not honour compensation terms.
In July, Musk and X Corp. won a class-action lawsuit where laid-off employees sought $500 million in severance under the Employee Retirement Income Security Act. However, in September, a former employee was awarded unpaid severance in a private arbitration session, potentially setting a precedent for similar cases.
US District Judge Maxine Chesney, overseeing the executives’ case, also denied Musk’s request to dismiss a similar claim filed by former “core tech” general manager Nicholas Caldwell, who is seeking $20 million in compensation for lost severance.
Ex-Twitter executives sue Elon Musk for $128m in severance pay
Ex-CEO Parag Agrawal and other top executives accuse Musk of believing ‘rules don’t apply to him’.
X owner Elon Musk has been sued by four former top Twitter executives
Former top Twitter executives, including ex-CEO Parag Agrawal, have sued Elon Musk seeking more than $128m in unpaid severance.
In the lawsuit filed in a San Francisco court on Monday, the four former executives accused the Tesla CEO of firing them without cause and demonstrating a “cavalier attitude” towards his financial obligations.
“Under Musk’s control, Twitter has become a scofflaw, stiffing employees, landlords, vendors, and others,” the plaintiffs said in the 39-page lawsuit.
“Musk doesn’t pay his bills, believes the rules don’t apply to him, and uses his wealth and power to run roughshod over anyone who disagrees with him.”
The former executives – also including ex-CFO Ned Segal, ex-chief legal officer Vijaya Gadde and former General Counsel Sean Edgett – say they are owed one year’s salary and stock options.
Musk fired Agrawal, Gadde and Segal in late October 2022 after completing his purchase of Twitter, now called X, for $44bn.
Musk’s purchase of the platform came on the heels of a bitter dispute with top executives after Twitter took him to court to ensure he honour the terms of the acquisition.
The former executives said in the suit that Musk invented a “fake” example of gross negligence and wilful misconduct – Twitter paying fees to outside lawyers for their work closing the acquisition – to avoid paying them severance.
“If Musk felt that the attorneys’ fees payments, or any other payments, were improper, his remedy was to seek to terminate the deal – not to withhold executives’ severance payments after the deal closed,” the former executives said in the suit.
X is already facing three other lawsuits by former workers seeking large severance packages, including a pair of class action suits that claim rank-and-file workers are owed at least $500m.
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