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Ousted Twitter execs sue Elon Musk for $128M in severance
OLeary Ventures Chairman Kevin OLeary reacts to Elon Musk being forced to testify in the SECs probe into his purchase of Twitter on The Big Money Show.
A group of former Twitter executives have filed a lawsuit against Elon Musk that alleges he owes them over $128 million in severance he refused to pay following his 2022 takeover of the social media company.
The lawsuit, which was first reported by the Wall Street Journal, claims that after the Musk-led ownership group acquired Twitter and took it private for $44 billion, he sought to recoup some of the costs of acquiring Twitter — which Musk has since rebranded as X — by firing the Twitter executives for cause to deny them severance they would have otherwise been contractually entitled to.
The lawsuit was filed by former Twitter CEO Parag Agrawal, former CFO Ned Segal, former chief legal officer Vijaya Gadde and former general counsel Sean Edgett. Through the lawsuit, Agrawal seeks to recover about $57.4 million in severance, with Segal seeking $44.5 million, Gadde $20 million and Edgett $6.8 million. Musk, X Corp. and several other individuals are named as defendants in the case.
“Under Musk’s control, Twitter has become a scofflaw, stiffing employees, landlords, vendors and others,” the plaintiffs’ lawsuit alleges. “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.”
Elon Musk and X are facing a lawsuit filed by four former Twitter executives who seek about $128 million in severance pay. (Muhammed Selim Korkutata/Anadolu Agency / Getty Images)
The lawsuit claimed that “Musk has a special ire” toward the four former Twitter executives because in their roles at the company “they appropriately and vigorously represented the interests of Twitter’s public shareholders throughout Musk’s wrongful attempt to renege on the deal.”
Musk offered to buy Twitter for $44 billion in April 2022, which the board accepted after initially attempting to block a hostile takeover by using a “poison pill” strategy after the billionaire announced he had purchased over 9% of the company’s outstanding shares.
X NOW WORTH 71% LESS THAN WHEN MUSK BOUGHT IT, FIDELITY ESTIMATES
The former Twitter executives’ lawsuit alleges Musk improperly claimed he fired them for cause to deny them severance benefits. (Slaven Vlasic/Getty Images for The New York Times / Getty Images)
But by May, Musk said the deal was “temporarily on hold” as he looked to gather more information about the company and in July he threatened to terminate the deal due to his concerns about bot accounts. Twitter pushed back, arguing that Musk was reneging on a deal he had agreed to, and sued in the Delaware Court of Chancery to conclude the deal with a trial slated for October 2022.
To prevent a trial, Musk re-submitted his $44 billion offer and the deal was finalized on Oct. 28, 2022. After the deal was completed, Musk fired Agrawal, Gadde and other key Twitter leaders who he believed undermined free speech on the platform.
The former Twitter executives’ lawsuit notes that as he was closing the acquisition of Twitter, Musk told his official biographer, Walter Isaacson, that he would “hunt every single one of” Twitter’s executives and directors “till the day they die.”
SEC PROBES ELON MUSK’S TWITTER TAKEOVER
Former Twitter CEO Parag Agrawal is seeking over $57 million in severance through the lawsuit. (Photo by Kevin Dietsch/Getty Images / Getty Images)
The lawsuit also cites an excerpt from Isaacson’s book in which he quotes Musk as pushing through the sale a day early to allow him to fire Agrawal and the others for cause before stock options could vest because “there’s a 200-million differential in the cookie jar between closing tonight and doing it tomorrow morning.”
“Because Musk decided he didn’t want to pay Plaintiffs’ severance benefits, he simply fired them without reason, then made up fake cause and appointed employees of his various companies to uphold his decision. He claimed in his termination letters that each Plaintiff had committed ‘gross negligence’ and ‘willful misconduct’ without citing a single fact in support of this claim,” the lawsuit alleged. “Musk’s employees then spent a year trying to come up with facts to support his pre-ordained conclusion, to no avail.”
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The lawsuit claimed that X has continued to deny the severance benefits to the former executives, wrongfully withheld documents and needlessly prolonged the process.
“This is the Musk playbook: to keep the money he owes other people, and force them to sue him. Even in defeat, Musk can impose delay, hassle, and expense on others less able to afford it,” the lawsuit claimed.
X did not immediately respond to a request for comment.
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