Former Twitter Executives Sue Elon Musk for $128 Million in Unpaid Severance
A group of former Twitter executives has filed a lawsuit against Elon Musk, seeking to recover over $128 million in severance payments that they claim Musk has failed to pay since he acquired the company, now known as X, more than a year ago. The executives, including former CEO Parag Agrawal, former CFO Ned Segal, former Chief Legal Officer Vijaya Gadde, and former General Counsel Sean Edgett, were all fired shortly after Musk took control of Twitter.
The lawsuit alleges that Musk’s refusal to make the severance payments is an act of revenge against the executives after being forced to proceed with the $44 billion acquisition deal, which he had tried to avoid for months. The complaint states that Musk fired the executives without reason and fabricated claims of “gross negligence” and “willful misconduct” without providing any evidence to support these allegations.
X, the company now owned by Musk, has not yet responded to the lawsuit. This legal action is the latest in a series of lawsuits brought by former Twitter employees in relation to Musk’s acquisition. Another lawsuit filed in July by a former Twitter human resources leader seeks class action status and demands additional severance benefits allegedly owed to former employees, amounting to no less than $500 million. The company has also been accused of failing to pay annual bonuses to employees laid off after Musk’s takeover.
Agrawal, Gadde, and Segal have previously sued Musk to recover more than $1 million in legal fees they claimed they were owed. The court ruled in favor of the executives and ordered the company to pay the fees. Musk and X have also faced lawsuits from vendors, landlords, and business partners who allege that the company has not fulfilled its payment obligations.
The lawsuit highlights an anecdote from a biography about Musk published by journalist Walter Isaacson. According to the complaint, Musk intentionally sought to cheat the former executives out of their contractual entitlements. The biography recounts how Musk closed the Twitter acquisition a day earlier than scheduled and immediately fired Agrawal and the other executives to prevent them from resigning and claiming their severance benefits, saving the company an estimated $200 million. The lawsuit argues that Musk’s actions violated federal labor laws, as the reasons he cited for firing the executives do not meet the criteria for “cause” under the severance plans.
The termination letters sent by Musk to some of the executives alleged that their misconduct was related to a failure to cooperate with a government or internal investigation of Twitter. However, the letters did not provide any evidence to support these allegations. The former executives claim that they spent months trying to obtain their severance payments from X but were met with resistance from the company, which allegedly withheld documents and took actions to hinder their claims.
In addition to seeking the unpaid severance payments, the lawsuit also demands that Musk make interest payments on the outstanding amounts and faces penalties for failing to provide the executives with legally required plan documents associated with their benefits.
This lawsuit adds to the growing legal challenges faced by Musk and X in relation to their business dealings. It remains to be seen how this legal battle will unfold and whether the former Twitter executives will be successful in their quest to recover their unpaid severance.