Former high-ranking officials of Twitter have taken legal action against Elon Musk and X Corp., alleging they are owed more than $128 million in severance payments left unpaid. The lawsuit, filed on Monday, involves Twitter's ex-CEO Parag Agrawal, CFO Ned Segal, Chief Legal Counsel Vijaya Gadde, and General Counsel Sean Edgett, who claim they were terminated without valid reasons on the day of Musk's acquisition of Twitter in 2022, later rebranded as X.
Accusing Musk of fabricating grounds for their dismissals to avoid paying severance, the executives including former CEO Parag Agrawal stated he "made up fake cause and appointed employees of his various companies to uphold his decision," as per the lawsuit filed in federal court in the Northern District of California. This legal action highlights a broader pattern, as Elon Musk has faced lawsuits from numerous former who were similarly denied severance after being terminated en masse.
The lawsuit portrays Musk's approach as one of disregard for financial obligations, asserting that under his control, Twitter has become neglectful in honoring commitments to employees, landlords, vendors, and others. Representatives for Musk and X Corp., headquartered in San Francisco, did not immediately respond to requests for comment on Monday.
The former executives argue their severance agreements entitled them to a year's salary plus unvested stock awards at Twitter's acquisition price, set at $44 billion when Musk took over in October 2022. They maintain they were dismissed without valid cause, contrary to the terms outlined in their severance plans, which specified narrow criteria such as felony convictions, gross negligence, or willful misconduct.
According to the lawsuit, Musk cited "gross negligence and willful misconduct" as the grounds for dismissal, partly due to Twitter's payments to external lawyers for their role in finalizing the acquisition. The executives contend they were obligated to cover these fees to fulfill their fiduciary duties to the company.
The lawsuit further alleges that X Corp. is facing a substantial number of lawsuits related to unpaid debts, reflecting Musk's cavalier attitude toward financial responsibilities. It claims Musk's response to these legal actions has been indifferent, reportedly opting to let the lawsuits proceed rather than addressing the outstanding obligations.
In light of these developments, the legal battle between the former Twitter executives and Musk's X Corp. underscores the complexities surrounding executive severance agreements and raises questions about corporate accountability in high-stakes acquisitions.
