Billionaire Elon Musk faces a lawsuit by four former top executives of Twitter, who are demanding $128 million in unpaid severance.
The executives, former CEO Parag Agrawal, former CFO Ned Segal, former chief legal officer Vijaya Gadde, and former general counsel Sean Edgett, filed the lawsuit in California federal court on Monday, extending a legal battle that began even before Musk’s $44 billion takeover of Twitter in October 2022.
As the deal neared its completion, the lawsuit contends Musk tried to back out but failed, and then concocted a reason to fire the four executives to get out of paying their severance.
The executives led Twitter as it sued Musk to force him to close the deal, and “for their efforts, Musk vowed a lifetime of revenge,” the lawsuit said.
“Under Musk’s control, Twitter has become a scofflaw, stiffing employees, landlords, vendors, and others,” the lawsuit said. “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.”
An attorney who has represented Musk didn’t immediately respond to a request for comment.
Musk, who renamed Twitter to X in 2023, said the executives were fired for “gross negligence” and “willful misconduct,” which they have denied.
The company hasn’t paid severance or benefits to several other former executives, the lawsuit said.
“Musk’s refusal to pay Plaintiffs their benefits is part of a larger pattern of refusing to pay Twitter’s former employees the benefits and other compensation they are due,” it said.
Agrawal is seeking more than $57 million, including one year’s salary, stock awards at Musk’s $54.20 acquisition price, and health insurance premiums. Segal is seeking $44 million, Gadde wants $20 million, and Edgett wants $6.8 million.
The lawsuit argues the severance benefits are an important factor for corporate governance because they align the economic interests of executives and shareholders in the event of a corporate takeover. Without severance, executives could oppose a transaction even if it is in the best interest of shareholders.
The lawsuit names Musk, X Corp., and three individuals described as working for Musk-related companies.
Write to Liz Moyer at liz.moyer@barrons.com
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