Twitter's ex-CEO, CFO, and managers sue Elon Musk for $128M

Musk playbook described as 'Keep money he owes other people, and force them to sue him'

Four top former executives who were let go after Elon Musk acquired the social media platform have sued the tech billionaire for $128 million in severance payments.

Musk's $44 billion Twitter acquisition did not go smoothly. An avid tweeter, he became a major stakeholder in March 2022 and a month later made a bid to purchase the site. He tried to walk away from the purchase - publicly blaming Twitter for apparently lying about the number of bot accounts on the site - but was sued and amid threats of being forced to buy the social media biz wrote a cheque and took over.

Musk quickly fired Twitter’s top executives and thousands of employees. Now ex-CEO Parag Agrawal, former-CFO Ned Segal, head of legal, policy, and trust, Vijaya Gadde, and general counsel who was fired by Musk, senior legal executive Sean Edgett, have sued him for not paying severance benefits.

Under Twitter's policies, executives terminated without cause following a change in leadership were entitled to severance pay. The former top brass argue Musk owes them hundreds of millions of dollars,

Musk counters that the execs he let go committed gross negligence and willful misconduct.

In the lawsuit [PDF], the ex-exec plaintiffs quoted passages of Walter Isaacson's biography of Musk as evidence that he didn't want to pay them:

The closing of the Twitter deal had been scheduled for that Friday. 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.

But Musk decided that he did not want that...He would force a fast close that night. If his lawyers and bankers timed everything right, he could fire Agrawal and other top Twitter executives "for cause" before their stock options could vest..."There's a 200-million differential in the cookie jar between closing tonight and doing it tomorrow morning," he told me late Thursday afternoon in the war room as the plan unfolded.

Musk executed the above plan. Isaacson’s version of his actions claims that Musk did the deal at 4:12PM and “At precisely that moment, his assistant delivered letters of dismissal to Agrawal and his top three officers.”

Six minutes later, Musk's top security officer came down to the second-floor conference room to say that all had been ‘exited’ from the building and their access to email cut off. The instant email cutoff was part of the plan. Agrawal had his letter of resignation, citing the change of control, ready to send. But when his Twitter email was cut off, it took him a few minutes to get the document into a Gmail message.”

"He tried to resign," Musk told Isaacson's. "But we beat him," his gunslinging lawyer Alex Spiro replied, according to Isaacson's account of the takeover.

The plaintiffs’ lawyers argued that under the Employee Retirement Income Security Act (ERISA), they are entitled to severance benefits. They said Musk did not have any evidence that the former executives had committed gross negligence and willful misconduct.

The former execs are not the only ex-Twits taking legal action against Musk.

Last week, X and Musk were sued by two groups of ex-workers in separate lawsuits for similar severance payments woes. This came up in the new lawsuit.

"This is the Musk playbook: to keep the money he owes other people, and force them to sue him," the court documents filed by Agrawal the others said.

The four plaintiffs have asked judges to order X to pay each person one-year’s salary, the value of their stock options, and other insurance-related payments totaling over $128m.

The Register has asked X for comment. ®

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