ex-CEO Parag Agrawal (L) and Elon Musk  (R)
ex-CEO Parag Agrawal (L) and Elon Musk (R)

Twitter's former leaders including ex-CEO Parag Agrawal sue Elon Musk for non-payment of severance totalling USD 128 mn

Former Twitter leaders sue Elon Musk for unpaid severance of $128 million, alleging wrongful termination and Musk's refusal to honor the deal.

New York | Twitter's former leadership team, including ex-CEO Parag Agrawal and Chief Legal Officer Vijaya Gadde, has sued the platform's owner Elon Musk, saying the billionaire fired them without reason and owes them severance payments worth USD 128 million.

The lawsuit against the Tesla and SpaceX chief and X Corp was filed in the US District Court, Northern District of California by Agrawal, Gadde, Twitter's former Chief Financial Officer Ned Segal and General Counsel Sean Edgett.

Musk has a “special ire” toward Agrawal, Segal, Gadde, and Edgett, who in their leadership roles at Twitter “appropriately and vigorously represented the interests of Twitter's public shareholders throughout Musk's wrongful attempt to renege on the deal. For their efforts, Musk vowed a lifetime of revenge,” the 38-page lawsuit said.

Agrawal worked at Twitter from 2011 until 2022 and was the platform's Chief Executive Officer from November 29, 2021, until October 27, 2022, a role he took over from the company's founder and former CEO Jack Dorsey.

The lawsuit also notes that as Musk was closing Twitter's acquisition for USD 44 billion in 2022, the billionaire told his official biographer Walter Isaacson, that he would “hunt every single one of” Twitter's executives and directors “till the day they die.” “These statements were not the mere rantings of a self-centred billionaire surrounded by enablers unwilling to confront him with the legal consequences of his own choices. Musk bragged to Isaacson specifically how he planned to cheat Twitter's executives out of their severance benefits in order to save himself USD 200 million,” he said.

The four former Twitter executives claim in the lawsuit that Musk owes them severance payments totalling about USD 128 million. “Under Musk's control, Twitter has become a scofflaw, stiffing employees, landlords, vendors, and others. 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,” the lawsuit said.

It said that Agrawal is entitled to severance benefits amounting to over USD 57 million, which is equal to his one-year salary of one million dollars plus restricted stock units, performance share units and other benefits. Gadde is entitled to severance benefits in the amount of USD 20 million, an amount equal to one year's salary of USD 600,000 plus other benefits.

The lawsuit alleges that under Twitter's severance plans if an eligible executive is terminated without cause following a change in control, they are entitled to severance benefits.

“Because Musk decided he didn't want to pay Plaintiffs' severance benefits, he simply fired them without reason, then made up fake cause and appointed employees of his various companies to uphold his decision. He claimed in his termination letters that each Plaintiff committed “gross negligence” and “willful misconduct” without citing a single fact in support of this claim,” the lawsuit said.

The four executives highlighted “the Musk playbook”, which is “to keep the money he owes other people and force them to sue him. Even in defeat, Musk can impose delay, hassle, and expense on others less able to afford it.” The lawsuit added that it would be “inequitable and unjust” to prevent the four plaintiffs from recovering benefits and other remedies from Musk, who is personally responsible for and will individually benefit from the acts of X Corp.

It also adds that as early as April 2022, shortly after signing the Merger Agreement, but before he owned the company, Musk wanted Agrawal to terminate Gadde. On or about April 27, 2022, Musk, Agrawal, and Dorsey joined a FaceTime call. “Agrawal's intention for the call was to discuss Musk's vision for Twitter, and how they could align so that Agrawal could lead with an awareness of that vision over the next few months prior to the closing, while shareholder and regulatory approval was pending. Musk had no such intention. Within minutes of the start of the call, Musk directed Agrawal to terminate Gadde immediately.

When Agrawal refused, Musk gave him a day to comply, telling him to text Musk confirmation of her firing.” The lawsuit alleges that Agrawal then said that he would take what Musk had asked under consideration, but as CEO, he made his own decisions. "Musk became aggressive and angrily repeated his orders. When Agrawal refused to fire Gadde, Musk told him that “we can't work together” as a result.

“Following the call, Musk texted Dorsey about his frustration over Agrawal's refusal to fire Gadde. Dorsey wrote, “At least it became clear that you can't work together [with Agrawal]. That was clarifying.” Musk agreed, responding “Yeah”.”

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