Elon Musk, owner of social media platform X, gestures during an event with Britain’s Prime Minister Rishi Sunak in London on Nov. 2, 2023. (AP Photo/Kirsty Wigglesworth, Pool, File)
Four former members of Twitter’s top brass were wrongfully fired by Elon Musk on the eve of his begrudging acquisition of the company in an effort by the billionaire to illegally deny them severance packages, according to a lawsuit filed in federal court on Monday.
“Musk has a special ire toward Plaintiffs Parag Agrawal, Ned Segal, Vijaya Gadde, and Sean Edgett,” the complaint reads. “As the former Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, and General Counsel, respectively, of Twitter, they 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.”
In sum, the lawsuit claims Musk attempted to bilk the plaintiffs out of well over $128.59 million in severance pay and stock options.
Each of the four former executives had clauses in their employment contracts that entitled them to one year’s salary plus the value of hefty unvested stock awards if their employment was “negatively affected by a change in control,” according to the 39-page lawsuit filed in the U.S. District Court for the Northern District of California.
The unvested stock would be valued at the acquisition price of Twitter’s stock at the time of the April 2022 merger — a combined $44 billion or $54.20 per share, which Musk famously attempted to back out of before being sued and forced to close the deal.
The social media company now known as X listed each executive’s golden parachutes in their securities filings, the lawsuit explains.
“These provisions were well known and disclosed to Twitter’s public shareholders — and Musk — before the acquisition,” the complaint reads. “Indeed, Twitter’s proxy statement identified the specific amounts that would become payable by Twitter to its executive officers if they were involuntarily terminated (including if they left on their own for good reason) following the acquisition.”
Musk, however, had a plan to get around those mandatory payouts, according to his official biographer, Walter Isaacson, whose book about the Tesla and SpaceX mogul is cited at length in the lawsuit.
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Musk allegedly told Isaacson he would “hunt every single one of” Twitter’s executives and directors “till the day they die.” The would-be hunted were allegedly the subject of the billionaire’s disdain “because he was furious that Twitter’s Board and executives had defeated him and forced him to close the deal,” according to the lawsuit.
“These statements were not the mere rantings of a self-centered billionaire surrounded by enablers unwilling to confront him with the legal consequences of his own choices,” the complaint goes on. “Musk bragged to Isaacson specifically how he planned to cheat Twitter’s executives out of their severance benefits in order to save himself $200 million.”
On the literal eve of the takeover, Musk moved to conclude the acquisition a few key hours ahead of schedule, the lawsuit explains.
“The closing of the Twitter deal had been scheduled for that Friday,” Isaacson’s book reads. “An orderly transition had been scripted for the opening of the stock market that morning. The money would transfer, the stock would be delisted, and Musk would be in control. That would permit Agrawal and his top Twitter deputies to collect severance and have their stock options vest.”
By closing the deal out the night before, however, Musk could fire the then-executives “for cause” and avoid paying their severance and the value of their unvested stock awards, the lawsuit says.
The plaintiffs say they were not actually fired “for cause.” The lawsuit also names X and several SpaceX employees who were essentially made Musk’s stewards of Twitter at the time of the purchase — and implicates those employees in an after-the-fact effort to falsify firing justifications.
“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,” the filing goes on. “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. Musk’s employees then spent a year trying to come up with facts to support his preordained conclusion, to no avail.”
Each of the plaintiffs are suing the named defendants for a combined six counts under the Employee Retirement Income Security Act (ERISA). The act governs certain formal severance plans, like Twitter’s, and disputes are often adjudicated under an administrative process.
In the lawsuit, the plaintiffs claim Musk and X have dragged out that process to avoid paying. In addition to the severance pay and stock awards, the plaintiffs are requesting penalties of $110 per day from Dec. 29, 2022, plus interest, and attorneys’ fees.
Law&Crime reached out to X for comment on this story but no response was immediately forthcoming at time of publication.
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