A judge has ruled in favor of former Twitter CEO Parag Agrawal and other top executives, allowing them to pursue a lawsuit against Elon Musk over alleged wrongful terminations aimed at circumventing severance obligations. The former executives claim Musk orchestrated their firings to avoid paying substantial severance packages, including a year’s salary and unvested stock options.
The lawsuit stems from actions Musk allegedly took immediately following his acquisition of Twitter, now rebranded as X Corp. Reports indicate that Musk’s acquisition process included swift moves to restructure the organization, which included mass layoffs. Agrawal, joined by former Twitter executives including Vijaya Gadde (former chief legal officer), Ned Segal (former chief financial officer), and Sean Edgett (former general counsel), argues that Musk’s termination of their positions was deliberate, ensuring they could not receive promised compensation and unvested stock awards based on the company’s acquisition price.
The executives allege that Musk actively sought to avoid severance obligations by timing their dismissals. They argue that the termination process was strategically implemented to prevent them from formally resigning, effectively denying them a year’s worth of salary and any vested stock options due upon departure. In their suit, they accuse Musk of concocting reasons to justify these terminations, asserting that he was motivated by cost-saving measures rather than any legitimate cause.
As part of the evidence presented, the plaintiffs referenced a comment Musk made to biographer Walter Isaacson. Musk reportedly expressed a strong desire to close the acquisition deal promptly, implying that completing it later would result in “a $200 million differential in the cookie jar.” The executives interpret this statement as an indication of Musk’s financial motivations in executing swift, uncompensated terminations.
In a separate but related legal development, a lawsuit filed by Nicholas Caldwell, Twitter’s former general manager of core technology, was also permitted to proceed. Caldwell is seeking $20 million in severance compensation. The judge in Agrawal’s case is also overseeing Caldwell’s suit, in which Musk’s legal team attempted to have the claims dismissed. However, this request was denied, allowing Caldwell’s claims to proceed in court as well.
The executives involved in the case have not held back in their criticisms of Musk’s handling of severance-related obligations. They accuse him of exploiting his position and financial influence to dismiss obligations to former employees. In a pointed statement, the executives alleged, “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.” This outspoken stance illustrates the deep rift between the former executives and Musk, who has remained embroiled in a multitude of legal battles related to his stewardship of Twitter.
Musk’s actions following his takeover have led to widespread controversies, as he implemented sweeping changes that resulted in substantial job losses across the organization. The layoffs, which affected thousands of employees, were part of Musk’s efforts to reshape the company’s operational structure and reduce costs. While some viewed these moves as necessary for Musk’s vision of a leaner, more efficient social media platform, critics argue that his approach disregarded contractual obligations to employees and undermined worker rights.
Agrawal and the other executives maintain that Musk’s rapid and selective dismissals were designed to avoid contractual payouts. They argue that Musk sought cost-cutting measures in a manner that prioritized his financial interests over contractual responsibilities. The lawsuit contends that Musk’s tactics effectively nullified the severance packages initially stipulated in their employment agreements, leading to significant financial losses for the dismissed executives.
As this case progresses, it adds to a complex web of legal issues surrounding Musk’s acquisition of Twitter. Alongside employee compensation disputes, Musk faces other legal challenges related to his extensive restructuring of Twitter, including regulatory scrutiny and allegations of unfair dismissal practices. Legal experts note that this case could set an important precedent for future severance disputes, particularly in cases where high-level executives face abrupt terminations during corporate takeovers.
The outcome of this case could have broader implications for how severance packages and executive compensations are handled in high-stakes mergers and acquisitions. As the judge has allowed the lawsuits to proceed, the former Twitter executives are positioned to seek accountability and financial redress from Musk.
