Elon Musk encountered a legal hurdle in his efforts to evade severance payments to former top executives of Twitter, following his acquisition of the company in 2022. A judge ruled on Friday that former CEO Parag Agrawal and other high-ranking officials may continue with their claims, alleging that Musk terminated them right as the acquisition was finalized to avoid fulfilling their severance agreements.
The lawsuit, filed in March, asserts that Musk deliberately cut the executives off before they could formally resign, thereby denying them their entitled compensation. The complaint references a comment Musk made to biographer Walter Isaacson, in which he expressed urgency in closing the deal to sidestep a potential “$200 million differential in the cookie jar” between finalizing the agreement that evening versus the next morning.
Agrawal is joined by former Twitter legal chief Vijaya Gadde, former CFO Ned Segal, and former general counsel Sean Edgett in the lawsuit, all of whom claim they are owed one year’s salary along with unvested stock options valued at the acquisition price.
Musk is currently embroiled in several legal battles concerning employee compensation. Following the takeover, he initiated massive layoffs, resulting in claims from numerous former employees for unpaid severance, citing that Musk failed to adhere to compensation agreements.
While Musk and X Corp. won a class-action lawsuit in July regarding a $500 million severance claim under the Employee Retirement Income Security Act, a former employee was awarded unpaid severance in a private arbitration in September, which could influence future claims.
Additionally, US District Judge Maxine Chesney dismissed Musk’s bid to reject a related claim from former “core tech” general manager Nicholas Caldwell, who is seeking $20 million in severance compensation.