Ex-Twitter CEO Parag Agrawal moves forward with dismissal claim against Elon Musk

CEO Parag Agrawal and other top executives can continue with their claims, claiming that Musk was right to fire them when the deal closed.

Elon Musk has suffered a significant legal setback in his efforts to avoid severance payments to former Twitter executives who were fired during his takeover of the company in 2022. On Friday, a judge ruled that former CEO Parag Agrawal and other top executives could proceed with their claims , claiming that Musk was right to fire them when the deal was made to avoid paying their agreed-upon severance packages.

In a lawsuit filed in March, the executives alleged that Musk deliberately cut them off before they could formally resign, depriving them of the compensation they were entitled to. The lawsuit referenced a statement Musk made to biographer Walter Isaacson in which he expressed the urgency in closing the deal to avoid a “$200 million difference in the cookie jar” between closing the deal that evening and next morning.

Agrawal is joined in the legal battle by former chief legal officer Vijaya Gadde, former CFO Ned Segal and former general counsel Sean Edgett. All four managers claim they are owed one year’s salary, along with unvested shares, valued at the acquisition price.

This isn’t Musk’s first encounter with legal issues related to employee compensation. After acquiring Twitter, now renamed X Corp., Musk laid off thousands of employees as part of a major restructuring initiative. Many of those affected have filed claims for unpaid severance, alleging that Musk has failed to meet promised compensation terms.

In July, Musk and X Corp. won. a class action lawsuit filed by laid-off employees seeking $500 million in severance pay under the Employee Retirement Income Security Act. However, in September, a former employee was awarded unpaid severance pay during a closed arbitration session, which could set a precedent for similar cases in the future.

U.S. District Judge Maxine Chesney, who is overseeing the executives’ case, also denied Musk’s request to dismiss a similar claim brought by Nicholas Caldwell, a former managing director in “core tech” who Demands $20 million in compensation for lost severance.

As these legal challenges unfold, Musk continues to take a critical look at his management practices and treatment of former employees, highlighting the complexities of corporate governance during times of significant transition.

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