Elon Musk and X Corp. were sued yesterday by four former Twitter executives who say they were cheated out of more than $128 million in severance when Musk bought the social network and fired them.
Former Twitter CEO Parag Agrawal, former CFO Ned Segal, former Chief Legal Officer Vijaya Gadde, and former General Counsel Sean Edgett filed the lawsuit in US District Court for the Northern District of California. They say they are owed one year’s salary, stock awards, and health insurance premiums.
“If anyone around Musk had been willing to tell him the truth, he would have learned that his scheme to deny Plaintiffs their contractual severance payments was a pointless effort that would not withstand legal scrutiny,” the lawsuit said.
Still, Musk has so far avoided making the payments. Musk and X Corp. stonewalled the plaintiffs’ attempts to obtain their severance over the past year by “wrongfully withholding documents, needlessly prolonging any decisions, and generally playing out the ERISA [Employee Retirement Income Security Act] administrative process for all it’s worth,” the lawsuit said. “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.”
Musk’s company is separately facing lawsuits seeking severance payments for laid-off employees.
Musk “made up fake cause”
The former executives’ lawsuit cites passages from the Walter Isaacson-written biography in which Musk described his plan to avoid paying severance. “Musk bragged to Isaacson specifically how he planned to cheat Twitter’s executives out of their severance benefits in order to save himself $200 million,” the complaint said. The court filing points to a passage describing how Musk closed the October 2022 purchase in time to “fire Agrawal and other top Twitter executives ‘for cause’ before their stock options could vest.”
“There’s a 200-million differential in the cookie jar between closing tonight and doing it tomorrow morning,” the book quoted Musk as saying hours before the $44 billion acquisition was finalized.
The amounts allegedly owed to the four plaintiffs are less than $200 million. Agrawal says he is owed $57.4 million, Segal is seeking $44.5 million, Gadde is seeking $20 million, and Edgett is seeking $6.8 million.
“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,” the lawsuit said. “He claimed in his termination letters that each Plaintiff committed ‘gross negligence’ and ‘willful misconduct’ without citing a single fact in support of this claim. Musk’s employees then spent a year trying to come up with facts to support his preordained conclusion, to no avail.”
Musk’s letters of termination additionally accused Agrawal, Gadde, and Edgett of “failure to cooperate in good faith with a governmental or internal investigation of the Company,” the lawsuit said. Seven months later, Twitter denied all four of the plaintiffs’ requests for payment. The denial letters alleged that several of the executives “committed gross negligence due to the Company’s alleged corporate waste,” but “made no attempt to address Musk’s claim in the termination letters that some of the Plaintiffs had failed to cooperate with an investigation,” the lawsuit said.
https://arstechnica.com/?p=2007909