Musk Fails To Dismiss Ex-Twitter Execs’ Severance Suit

Elon Musk faced a legal setback as a judge ruled on Friday that former Twitter executives, including ex-CEO Parag Agrawal, can continue with their claims that Musk terminated them during his 2022 Twitter takeover to avoid paying severance benefits.

The executives allege Musk dismissed them just as he closed the USD 44 billion acquisition to prevent them from formally resigning and claiming severance packages. The complaint, initially filed in March, references a passage from Walter Isaacson's biography of Musk, where Musk purportedly noted a “200-million differential in the cookie jar” between completing the acquisition that night and waiting until the next morning.

This is one of multiple ongoing legal challenges over back pay and severance following Musk’s layoffs of thousands of Twitter employees during the company’s rebranding to X Corp. In September, a former staff member won unpaid severance in closed-door arbitration, setting a potential precedent for similar cases.

In July, Musk and X Corp. successfully fought a lawsuit involving alleged unpaid severance under the federal Employee Retirement Income Security Act, where it was argued that USD 500 million was owed to approximately 6,000 former Twitter employees.

US District Judge Maxine Chesney denied Musk’s request to dismiss the claims from Agrawal, former legal and policy chief Vijaya Gadde, CFO Ned Segal, and general counsel Sean Edgett, who are collectively seeking severance equal to one year’s salary plus unvested stock awards valued at Twitter's acquisition price.

Additionally, Judge Chesney rejected Musk’s motion to dismiss a related claim by ex-Twitter executive Nicholas Caldwell, who seeks USD 20 million for lost severance.

The case, Agrawal v. Musk, is being heard in the US District Court for Northern California, San Francisco.