2 weeks Ago By Pravrajya Suruchi
Elon Musk recently faced a setback in his ongoing legal battle over severance payments to former Twitter executives he fired after taking over the company in 2022. On Friday, a judge ruled that former Twitter CEO Parag Agrawal and other top executives can proceed with their claims against Musk, accusing him of intentionally cutting them off just as he finalized the acquisition deal to avoid paying them promised severance. In March, Agrawal and several other former Twitter leaders filed a lawsuit against Musk, arguing that he deliberately ended their employment before they could officially resign, thus denying them the compensation outlined in their contracts.
The executives claim that Musk rushed the acquisition deal to avoid paying what could have amounted to $200 million in severance costs. This argument was supported by a statement Musk reportedly made to his biographer, Walter Isaacson, where he said he was eager to close the deal quickly to avoid “a $200 million differential in the cookie jar between closing tonight and doing it tomorrow morning.” Joining Agrawal in the lawsuit are Vijaya Gadde, Twitter’s former chief legal officer; Ned Segal, former chief financial officer; and Sean Edgett, former general counsel.
Each of them claims they were entitled to one year’s salary along with unvested stock awards, which would have been calculated at Twitter’s acquisition price. This isn’t Musk’s first legal issue regarding employee compensation. After acquiring Twitter, which he rebranded as X Corp.
, Musk implemented massive layoffs, dismissing thousands of staff as part of a restructuring plan. Since then, many of these former employees have come forward, filing claims for unpaid severance, arguing that Musk failed to honor the compensation terms they were promised. In July, Musk and X Corp.
won a class-action lawsuit where laid-off employees had sought $500 million in severance under the Employee Retirement Income Security Act. However, in September, another former employee was awarded unpaid severance through a private arbitration session, setting a potential precedent for other similar cases. The judge overseeing the current case, U.
S. District Judge Maxine Chesney, also recently denied Musk’s request to dismiss another claim filed by Nicholas Caldwell, Twitter’s former “core tech” general manager. Caldwell is seeking $20 million in compensation, arguing that Musk owes him severance for his lost position.
As Musk navigates multiple legal battles over employee severance, it remains to be seen how these cases will impact his financial obligations to Twitter’s former employees. This ruling now allows Agrawal and his co-plaintiffs to continue their pursuit of severance payments, moving the case closer to trial..
