Billionaire Elon Musk, on Monday, March 4, 2024, got sued for sacking the executives of X (former Twitter), the company he took over in 2022 in a $44 billion deal.
Recall that Musk bought X for $44 billion, after which he sacked Parag Agrawal, its chief executive; Ned Segal, its Chief Financial Officer (CFO); Vijaya Gadde, its head of legal and policy; and Sean Edgett, its general counsel.
Almost two years after the termination of their employment, the agitated X executives filed the $128 million lawsuit against Musk, X and several employees of the billionaire’s rocket company, SpaceX, who served as Twitter’s de facto human resources department after the takeover.
A look into the lawsuit
Fintech Telex understands that the X executives had clauses in their contracts that stipulated that they could receive severance if X was no longer a public company. According to the lawsuit filed in US District Court for the Northern District of California, when Musk took the company private, they got entitled to the payments.
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The severance included one year’s salary plus unvested stock awards. For instance, Agrawal’s annual salary was $1 million, and he was awarded $12.5 million in stock that was scheduled to vest incrementally. However, should he be sacked as he was, Agrawal would be entitled to a so-called golden parachute payment of $60 million.
As stated in Twitter securities filing, Segal would receive $46 million and Gadde -$21 million.
The court filings, however, quoted Musk to have stated that he could dismiss the executives ‘for cause’ to avoid paying them severances, thereby saving himself about $200 million. The billionaire reportedly told his biographer, Walter Isaacson that he would hunt the executives “till the day they die.”
“This is the Musk playbook: to keep the money he owes other people, and force them to sue him. Even in defeat, Musk can impose delay, hassle and expense on others less able to afford it,” the plaintiffs alleged in the court documents.
Other matters arising
Over two dozen lawsuits have so far been preferred against X for non-payment, including two filed by former ‘low-level’ staff since Musk took over the micro-blogging company.
In February 2023, a tech startup Writer Inc., became at least the sixth company to sue X in the US over breach of contract and non-payment since Musk’s controversial takeover.
Musk was dragged again to court for his failure to pay a vendor.
It’s worth noting that the billionaire sold billions of dollars worth of his Tesla shares, and secured some debt at X to become the sole director, and owner.
Aside from Writer, there were at least five others that sued Musk:
X’s purported failure to pay rent to Columbia REIT resulted in the real estate firm defaulting on loans for various buildings, including the one housing Musk’s office space at 650 California Street in San Francisco.
Additionally, X fell behind on payments to larger entities. According to multiple reports, X abruptly cut off employees’ access to Slack due to unpaid bills. Slack, owned by Salesforce, serves as a workplace chat and collaboration platform.
In the complaint filed in California Superior Court, Writer alleged that X neglected to settle a bill totaling $113,856. Formerly known as Qordoba, Writer identifies as an AI company assisting employees in creating content aligned with their employer’s standards for brand, copy, and other style guidelines.
