Former Twitter executives has launched an explosive lawsuit against billionaire Elon Musk and his X Holdings Corporation over unpaid severance payments totaling a staggering $128 million.
The lawsuit, filed on March 4, 2024, in California, alleges breach of contract and failure to fulfill contractual obligations by Musk and his company.
Twitter’s Former Top Brass
Twitter’s former Chief Technology Officer, Chief Financial Officer, General Counsel, and other senior leaders who held pivotal roles within the social media giant were promised substantial severance packages ranging from $3 million to a whopping $25 million as part of their employment contracts.
The former Twitter executives who have filed the lawsuit against Musk are:
- Parag Agrawal (former chief executive officer)
- Ned Segal (former chief financial officer)
- Vijaya Gadde (former chief legal officer)
- Sean Edgett (former general counsel)
According to the lawsuit, the former executives have not received a single penny of their promised severance payments to date, despite being terminated following Musk’s acquisition of Twitter in 2023.
The executives claim that Musk fired them without valid reasons and then fabricated a cause to avoid paying the owed amount. According to a years-old severance plan, the executives are entitled to one year’s salary and stock awards. Here’s the breakdown of what each executive is owed:
- Parag Agrawal: Over $57 million
- Ned Segal: Over $44 million
- Vijaya Gadde: Over $20 million
- Sean Edgett: Over $6 million
The complaint alleges that Musk and X Holdings Corporation have blatantly disregarded their contractual obligations, leaving these once-influential leaders in a precarious financial situation.
However, Musk and his team may counter by citing provisions within the contracts that allow for termination “for cause,” potentially releasing the company from its severance obligations. The court will scrutinize the details of these agreements and the circumstances surrounding the terminations to determine if they were indeed justified or a breach of contract.
In 2022, Elon Musk made headlines when he acquired Twitter for a staggering $44 billion. The acquisition was not without its share of controversy.
Initially, Musk attempted to back out of the deal, but the threat of a lawsuit forced him to proceed.
Within minutes of the deal closing, Musk took swift action by firing key leaders at Twitter, including the four executives who are now suing him.
Reputational Risks and Financial Fallout
Beyond the staggering financial stakes, the former executives allege that their terminations have caused them significant reputational damage and financial harm.
They argue that their contributions were instrumental in Twitter’s success, and that Musk’s actions were part of a broader strategy to consolidate power and control over the company.
The lawsuit paints Musk as an individual who avoids paying debts and mistreats employees.
The filing in federal court in California alleges that 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.”
The Private Equity Puzzle
Silver Lake Partners, a prominent private equity firm, has a history of making bold bets on tech companies. Founded in 1999, it specializes in leveraged buyouts (LBOs) involving technology firms with the potential for substantial returns.
Apollo Global Management, another heavyweight in private equity, has made significant moves across various sectors.
The involvement of these private equity firms in the Twitter acquisition has also raised eyebrows.
These firms provided financing and acquired equity stakes in the company, leading to concerns about their influence over Twitter’s operations and decision-making processes.
Musk’s Response
Neither Elon Musk nor his company, X (formerly known as Twitter), has issued any public comments on the case till now.
Musk’s frequent legal representative, lawyer Alex Spiro, has also not responded to requests for comment.
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