Former Twitter Executives Sue Elon Musk Over Severance Claims

Legal Battle Over Unpaid Severance Ignites.

by Nouman Rasool
Former Twitter Executives Sue Elon Musk Over Severance Claims
© Justin Sullivan/Getty Images

In a significant legal battle gripping the tech and business world, four former Twitter executives, including ex-CEO Parag Agrawal, have initiated a lawsuit against billionaire Elon Musk, alleging he has failed to pay them over $128 million in owed severance.

This legal action follows Musk's contentious acquisition of Twitter in 2022, a move marked by claims of "gross negligence" and "willful misconduct" directed at these executives. The lawsuit, filed on Monday, sees Agrawal, alongside former CFO Ned Segal, ex-chief legal officer Vijaya Gadde, and former general counsel Sean Edgett, accusing Musk of reneging on severance payments contractually guaranteed to them.

The plaintiffs argue that Musk's decision to terminate their employment 'for cause'—without, they claim, any justifiable cause—immediately after his takeover, was a strategic move to avoid fulfilling severance obligations.

They assert that Musk's actions were motivated by vengeance, stemming from his frustration over being compelled by Twitter's Board and executives to complete the acquisition after he had attempted to withdraw his bid.

Severance Claims Escalate

Each plaintiff is seeking substantial severance compensation, with figures ranging from Agrawal's claim of more than $57 million to Edgett's nearly $7 million, in addition to attorneys' fees and interest.

According to the lawsuit, Twitter's severance policies promised senior executives a combination of one year's salary and unvested stock awards, calculated at the acquisition price, should their employment be adversely affected by a change in control.

This lawsuit has attracted considerable attention, with Forbes reportedly reaching out to Musk's representatives for comment. The legal document sharply criticizes Musk's approach to financial obligations, suggesting a pattern of evading payments due to others and subjecting them to the burdens of litigation.

The backdrop to this legal challenge is fraught with tension and conflict, particularly between Musk and the suing executives, who claim Musk harbored "special ire" towards them. They argue that their steadfast representation of Twitter's public shareholders during Musk's efforts to withdraw from the acquisition deal has made them targets of his vindictive actions.

In April 2022, Musk's unsolicited offer to privatize Twitter was accepted, valuing the company at a 30% premium of $54.20 per share. However, Musk later sought to exit the deal, alleging misinformation about bot activity on the platform.

Despite these claims, Twitter's leadership, under Agrawal, successfully pressured Musk into completing the purchase, leading to his immediate dismissal of the top executives and plans for widespread layoffs, alongside various controversial changes to the platform, now rebranded as X.

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