Setback for Elon Musk while Parag Agrawal and other ex-Twitter executives could file dismissal claims

Last updated:Nov 3, 2024, 4:42 PM IST

The executives filed a lawsuit in March, claiming Musk fired them before they could formally resign, depriving them of their agreed-upon severance packages.

A judge ruled that former top Twitter executives could continue their claims that Elon Musk fired them at the precise moment the acquisition was completed to avoid severance obligations. (File photo)

Elon Musk has suffered a legal setback in his efforts to avoid paying severance payments to Twitter’s former senior executives, who were fired during his takeover of the company in 2022. On Friday, a judge ruled that former CEO Parag Agrawal and others executives could continue their claims that Musk fired them at the exact moment the acquisition was completed to avoid severance obligations.

The executives filed a lawsuit in March, claiming Musk fired them before they could formally resign, depriving them of their agreed-upon severance packages. They pointed to Musk’s statement 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 tonight and tomorrow morning.”

In addition to Agrawal, former chief legal officer Vijaya Gadde, ex-CFO Ned Segal and former general counsel Sean Edgett claim they are owed annual salaries and unvested stock valued at the acquisition price.

This lawsuit adds to Musk’s extensive legal challenges over employee compensation following his acquisition of Twitter, now renamed X Corp. After Musk implemented large-scale layoffs, many affected employees filed claims for unpaid severance payments, alleging that Musk had violated compensation agreements.

In July, Musk and X Corp. won. a class action lawsuit in which former employees sought $500 million in severance pay under the Employee Retirement Income Security Act. However, in a separate arbitration case in September, a former employee was awarded unpaid severance pay, which could set a precedent for similar claims.

U.S. District Judge Maxine Chesney, who oversaw the case, also denied Musk’s request to dismiss a related claim by Nicholas Caldwell, a former chief executive of “core tech,” who is seeking $20 million for lost severance pay .