Former Twitter C-suite sues Elon Musk for Severance

Four of the most senior members of Twitter’s past C-suite are suing Elon Musk for more than $128.6 million, claiming the new owner of the social media giant schemed to bilk them out of their contractual severance to save $200 million after buying the site back in 2022. “Because Musk decided he didn’t want to pay plaintiffs’ severance benefits, he simply fired them without reason, then made up fake cause and appointed employees of his various companies to uphold his decision,” their complaint said.

A federal complaint filed Monday in San Francisco by Sidley Austin lawyers says Musk had it out for Twitter’s former Chief Executive Officer Parag Agrawal, Chief Financial Officer Ned Segal, Chief Legal Officer Vijaya Gadde, and General Counsel Sean Edgett, and told his biographer Walter Isaacson that he would fire them “for cause” before their stock options could vest. Apparently Musk was furious that he had to go through with purchasing the company, and allegedly said he would “hunt every single one of” Twitter’s executives and directors “till the day they die.”

The foursome says this wasn’t just a rant by an entitled billionaire. “Musk has a special ire toward plaintiffs Parag Agrawal, Ned Segal, Vijaya Gadde, and Sean Edgett,” their complaint said. “As the former Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, and General Counsel, respectively, of Twitter, they appropriately and vigorously represented the interests of Twitter’s public shareholders throughout Musk’s wrongful attempt to renege on the deal. For their efforts, Musk vowed a lifetime of revenge.”

The lawsuit notes that all four had clauses in their employment agreements entitling them to severance equal to one year’s salary and unvested stock awards if Twitter was no longer a public company. Quoting passage from Isaacson’s book, the complaint describes Musk as bent on forcing a sale the night before. Isaacson writes that Musk told him “There’s a 200-million differential in the cookie jar between closing tonight and doing it tomorrow morning.

“At 4:12 p.m. Pacific time, once they had confirmation that the money had transferred, Musk pulled the trigger to close the deal. 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.

“By that point, he had already been fired by Musk. ‘He tried to resign,’ Musk said. ‘But we beat him,’ his gunslinging lawyer Alex Spiro replied.”

Spiro did not respond to a voicemail and email seeking comment on Isaacson’s account of the events quoted in the complaint.

This isn’t the first lawsuit the executives, and their lawyers at Sidley Austin, have filed against Musk post-firing. Gadde, Segal and Agrawal all sued for reimbursement of more than $1 million in legal bills they racked up in connection with lawsuits and investigations facing the company. The Delaware Chancery Court ordered Twitter, now called X Corp., to pay the fees back in October.

Related: Twitter hit with ERISA lawsuit for failure to pay $50M in severance to ex-employees

The executives say that by withholding the severance, Musk and X. Corp violated the Employee Retirement Income Security Act. The complaint also says Musk and the Twitter Severance Administration Committee denied their request for documents related to their denial of benefits.

Gadde is seeking roughly $20 million, Agrawal around $57 million, Segal roughly $44 million and Edgett around $6.7 million. In addition, they want a penalty of $110 per day from Dec. 29, 2022, up to the day that defendants provide the requested documents.

Also named as defendants are the purported members of the Twitter Severance Administration Committee: ERISA plan administrator Lindsay Chapman, a senior director of human resources at X Corp.; Brian Bjelde, a vice president of human resources at SpaceX; and Dhruv Batura, who is identified as an X Corp. employee who previously worked for nearly a decade at Tesla.

Gadde, Agrawal, Edgett and Segal are represented by David Anderson, a former U.S. attorney for the Northern District of California who is now a partner at Sidley Austin.