Elon Musk encountered a major legal hurdle as a US judge ruled that claims brought by former Twitter Inc. executives regarding severance entitlements may proceed.
The court’s decision late on Friday permits former Chief Executive Parag Agrawal, along with top executives including Vijaya Gadde, Ned Segal, and Sean Edgett, to pursue compensation allegedly withheld during Musk’s acquisition of Twitter in 2022.
This case centers on allegations that Musk dismissed these high-ranking officials as he finalized his $44 billion takeover, preempting their ability to resign and claim severance formally.
The lawsuit, filed by Agrawal and his fellow former executives in March, references a statement attributed to Musk in Walter Isaacson’s recent biography.
According to the biography, Musk is quoted as noting a “200-million differential in the cookie jar between closing tonight and doing it tomorrow morning,” suggesting urgency in his actions as he neared the Twitter acquisition’s completion.
The court’s ruling on Friday from US District Judge Maxine Chesney dismissed arguments by Musk’s legal team to throw out Agrawal’s claims.
Agrawal and his colleagues are seeking severance benefits amounting to one year’s salary plus the value of unvested stock awards calculated at the acquisition price.
Notably, Musk’s legal battles over severance are not limited to these executives; they form part of a broader pattern of claims from thousands of former Twitter employees.
Backstory
Since taking control of Twitter in October 2022, Musk has been embroiled in numerous disputes over severance payments and other financial obligations, coinciding with a mass layoff of Twitter staff that led to the rebranding of Twitter as X Corp.
- In September, one former employee was reportedly awarded unpaid severance in a closed-door arbitration session, a ruling that could potentially influence similar cases pending against X Corp.
- In an earlier case in July, Musk’s legal team successfully defended against claims that $500 million in severance payments was owed to around 6,000 former Twitter employees under the US Employee Retirement Income Security Act.
- The Agrawal-led lawsuit represents one of three active suits brought against Musk by former Twitter executives. Among these is a claim by Nicholas Caldwell, Twitter’s former General Manager for Core Technology, who is seeking $20 million in severance-related compensation.
- The court’s denial of Musk’s request to dismiss Caldwell’s complaint underscores the judiciary’s openness to further review the severance issues arising from Musk’s acquisition.