Former senior executives of Twitter are suing Elon Musk and X Corp., saying they are entitled to a total of more than $128 million in unpaid severance payments.
Twitter’s former CEO Parag Agrawal, Chief Financial Officer Ned Segal, Chief Legal Counsel Vijaya Gadde and General Counsel Sean Edgett claim in the lawsuit filed Monday that they were fired without a reason on the day in 2022 that Musk completed his acquisition of Twitter, which he later rebranded X.
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Because he didn’t want to pay their severance, the executives say Musk “made up fake cause and appointed employees of his various companies to uphold his decision.”
The lawsuit says not paying severance and bills is part of a pattern for Musk, who's been sued by “droves" of former rank-and-file Twitter employees who didn't receive severance after Musk terminated them by the thousands.
“Under Musk’s control, Twitter has become a scofflaw, stiffing employees, landlords, vendors, and others,” says the lawsuit, filed in federal court in the Northern District of California. “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.”
Representatives for Musk and San Francisco-based X did not immediately respond to messages for comment Monday.
The former executives claim their severance plans entitled them to one year's salary plus unvested stock awards valued at the acquisition price of Twitter. Musk bought the company for $44 billion, or $54.20 per share, taking control in October 2022.
They say they were all fired without cause. Under the severance plans, “cause” was narrowly defined, such as being convicted of a felony, “gross negligence” or “willful misconduct.”
According to the lawsuit, the only cause Musk gave for the firings was “gross negligence and willful misconduct,” in part because Twitter paid fees to outside attorneys for their work closing the acquisition. The executives say they were required to pay the fees to comply with their fiduciary duties to the company.
“If Musk felt that the attorneys’ fees payments, or any other payments, were improper, his remedy was to seek to terminate the deal — not to withhold executives’ severance payments after the deal closed,” the lawsuit says.
X faces a “staggering” number of lawsuits over unpaid bills, the lawsuit says. “Consistent with the cavalier attitude he has demonstrated towards his financial obligations, Musk’s attitude in response to these mounting lawsuits has reportedly been to ‘let them sue.’”