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The executives filed a lawsuit in March, alleging that Musk cut them off before they could formally step down, thus denying them their agreed-upon severance packages.
A judge ruled that former Twitter top executives could pursue their claims that Elon Musk fired them precisely at the time of the acquisition’s closing to sidestep severance obligations. (File Photo)
Elon Musk has encountered a legal setback in his efforts to avoid paying severance to Twitter’s former senior executives, who were dismissed during his 2022 acquisition of the company. On Friday, a judge ruled that former CEO Parag Agrawal and other top executives could pursue their claims that Musk fired them precisely at the time of the acquisition’s closing to sidestep severance obligations.
The executives filed a lawsuit in March, alleging that Musk cut them off before they could formally step down, thus denying them their agreed-upon severance packages. They referenced Musk’s statement to biographer Walter Isaacson, where he expressed urgency in closing the deal to avoid a “$200 million differential in the cookie jar between closing tonight and doing it tomorrow morning.”
Alongside Agrawal, former legal head Vijaya Gadde, ex-CFO Ned Segal, and former general counsel Sean Edgett claim they are owed one year’s salary and unvested stock awards valued at the acquisition price.
This lawsuit adds to Musk’s extensive legal challenges related to employee compensation following his Twitter takeover, now rebranded as X Corp. After Musk implemented large-scale layoffs, many affected employees filed claims for unpaid severance, asserting that Musk had breached compensation agreements.
In July, Musk and X Corp. won a class-action lawsuit in which former employees sought $500 million in severance under the Employee Retirement Income Security Act. However, in a separate arbitration case in September, a former employee was awarded unpaid severance, which could set a precedent for similar claims.
U.S. District Judge Maxine Chesney, overseeing the case, also denied Musk’s motion to dismiss a related claim by Nicholas Caldwell, a former “core tech” general manager who is seeking $20 million for lost severance.
