NewsElon Musk sued by former Twitter executives, $128 million on stake

Elon Musk sued by former Twitter executives, $128 million on stake

Elon Musk sued by former Twitter executives, $128 million on stake
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2:21 PM EST, March 5, 2024

In a dramatic legal battle that echoes the turbulent transition of Twitter into X Corp., former senior executives of the social media giant have launched a lawsuit against Elon Musk, the company's new owner, seeking over $128 million in what they claim are unpaid severance payments. This high-profile case, filed in the Northern District of California, underscores the contentious fallout following Musk's takeover of Twitter in 2022, which has since plunged the company into a vortex of legal challenges and public scrutiny.

The plaintiffs in the case include Twitter's ex-CEO Parag Agrawal, CFO Ned Segal, Chief Legal Counsel Vijaya Gadde, and General Counsel Sean Edgett. They allege that their abrupt terminations were executed without justification on the very day Musk finalized his acquisition of Twitter, which he renamed X just after. The crux of their argument lies in the assertion that Musk fabricated reasons to dismiss them to evade severance payments.

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Is Musk fair businessman?

The legal claim paints a picture of Musk as a businessman who habitually avoids fulfilling financial obligations, a behaviour pattern allegedly extending to employees, landlords, vendors, and others. The lawsuit characterizes Twitter under Musk's reign as a "scofflaw," a term denoting contempt for legal obligations, starkly contrasting with the company's previous operational ethos.

According to the lawsuit, the severance agreements in question entitled the former executives to a year's salary plus unvested stock awards, based on the acquisition price of Twitter—$44 billion, or $54.20 per share. The definition of "cause" for dismissal within these agreements was explicitly narrow, limited to scenarios such as felony convictions, "gross negligence," or "willful misconduct."

Musk's justification for the firings allegedly revolved around accusations of "gross negligence and willful misconduct," particularly Twitter's payment of fees to outside attorneys involved in closing the acquisition deal. The lawsuit counters this by arguing that such payments were obligatory under their fiduciary duties to the company, thereby challenging Musk's rationale for withholding severance.

The broader narrative surrounding this lawsuit indicates a tumultuous phase for X, formerly Twitter, as it grapples with a "staggering" array of lawsuits over unpaid bills, reflecting a cavalier approach to financial commitments under Musk's leadership. This legal confrontation highlights the friction between Musk's management style and the established corporate governance of Twitter. It raises questions about the future direction and stability of the social media platform under its new moniker, X.

Whats ahead for X?

As the case unfolds, industry observers and the public are keenly watching how this legal battle will shape the legacy of one of the internet's most influential platforms and the practices of one of the tech industry's most controversial figures. With representatives for Musk and X Corp. yet to respond to the allegations, the saga promises to shed light on the challenges of corporate acquisitions and the complexities of executive severance agreements in the high-stakes tech world.

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