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Four former Twitter executives, including ex-chief executive Parag Agrawal, are suing Elon Musk for more than $128mn in severance pay that they allege the billionaire withheld from them when he bought the social media site.
Musk fired Agrawal, along with former chief legal officer Vijaya Gadde, former general counsel Sean Edgett and former chief financial officer Ned Segal in October 2022 immediately after he completed his $44bn acquisition of the platform he renamed X.
By dismissing the executives “for cause”, Musk voided the large severance payouts they had expected to receive — nearly $60mn in Agrawal’s case.
However, in a lawsuit filed on Monday in federal court in California against Musk and X, the executives said that he had “manufactured” their terminations, accusing them of gross negligence and wilful misconduct “without citing a single fact in support of this claim”.
The executives were given a variety of reasons for their firings, such as “purported corporate waste” and issues with employee retention bonuses. Musk’s “purported termination of Plaintiffs ‘for cause’ was a sham designed to deprive Plaintiffs of their severance benefits”, the filing said.
A representative for X declined to comment.
The lawsuit marks the latest escalation between Musk and Twitter’s former leaders. He has publicly criticised them for their running of the platform on several occasions, particularly when he attempted to pull out of the acquisition and sue the company, prompting Twitter to sue him in turn to close the deal.
Last April, Agrawal, Gadde and Segal also sued X for failing to cover more than $1mn in personal legal expenses, including those related to an investigation by the US Department of Justice.
The lawsuit cites an excerpt from Musk’s biography by Walter Isaacson, in which the author claims the billionaire rushed to close the deal earlier than planned so that he could fire the executives “for cause” before they would have time for their stock options to vest, or resign themselves.
“There’s a 200-million [dollar] differential in the cookie jar between closing tonight and doing it tomorrow morning,” Musk allegedly told Isaacson.
“Musk was angry that, after multiple attempts to back out of the Twitter acquisition, Twitter had sued him and was forcing him to go through with the deal. He took his anger out on anyone involved with the merger litigation”, Monday’s filing said.
The suit is the latest legal and regulatory challenge to hit Musk and X after the entrepreneur led an aggressive cost-cutting effort last year in order to wrestle its finances under control, firing thousands of staff and refusing to pay many of Twitter’s vendors, landlords and partners. Musk faces potential class action lawsuits for allegedly failing to pay out full severance packages to employees during mass lay-offs.
