Former Twittter Execs Demand Data in Severance Complaint

Former Twitter CEO Parag Agrawal, former Chief Financial Officer Ned Segal, former Chief Legal Officer Vijaya Gadde and former general counsel Sean Edgett are seeking $200 million in unpaid severance. In November 2024, the former execs urged the court to open discovery in a dispute over severance and other benefits they allege they were wrongfully denied after Elon Musk took over Twitter in 2022, reported the tech news website Ars Technica. The group said that for seven months they were blocked from accessing key documents proving they’re owed about $200 million under severance agreements that Musk willfully tried to avoid paying in retaliation for executives forcing him to close the Twitter deal. They argue that, after Musk bought Twitter, he dodged paying severance packages by terminating them without cause.

According to Courthouse News, Musk told his biographer, Walter Isaacson, that he intended to terminate the execs for cause to avoid paying their severance, saving himself the money. The plaintiffs also claim Musk told his biographer he would “hunt” the executives “till the day they die.” Further, the group argues that Musk worked to accelerate the closing of the company, manufactured fake causes for the executives’ terminations, cut off their email access, and sent them termination letters before they could resign and claim their benefits. And Musk bragged to Isaacson specifically how he planned to cheat Twitter’s executives out of their severance benefits in order to save himself $200 million.

Musk Loses

In November 2024, Musk lost the battle to dismiss the severance lawsuit when federal judge Maxine Chesney ruled that he must face the former executives’ claims, and that under the Employee Retirement Income Security Act of 1974 (ERISA), it is unlawful for any person to discharge a participant or beneficiary for the purpose of interfering with the attainment of any right to which such participant may become entitled under ERISA. 

Severance Plans

The complaint alleges that the plaintiffs are owed severance benefits equal to one year’s salary plus unvested stock awards valued at the acquisition price. According to court documents:

“Severance plans are an important feature of modern corporate governance, aligning the economic interests of executives and shareholders in the face of a corporate takeover, especially one as contentious as Musk’s acquisition of Twitter. Severance plans encourage everyone to work toward getting the deal done. For example, without severance plans, executives could have a financial incentive to oppose an acquisition even when that acquisition is in the best interests of shareholders. Executives could also have a professional incentive to leave the company before the closing, which could jeopardize the company’s ability to close the transaction and the public shareholders’ ability to get the control premium provided by the acquisition. Executives’ severance benefits are designed to be legally resilient, as they must be, because severance payments are necessarily made by the acquired entity only after it passes into the hands of its acquiror. If executives could not count on getting their contractual severance, they would have no incentive to stay through the acquisition to run the business, oversee the acquisition process, and make sure the shareholders get paid.”

The complaint argues that, rather than pay plaintiffs’ severance benefits, Musk instead fired them without reason, then made up fake cause and appointed employees of his various companies to uphold his decision. He claimed in his termination letters that each Plaintiff committed “gross negligence” and “willful misconduct” without citing a single fact in support of this claim.

The plaintiffs’ contracts stipulated that they could receive severance pay if Twitter, now known as X, was no longer a public company. Musk took the company private in October 2022, when he purchased Twitter. The plaintiffs state in their complaint that Musk knew before buying Twitter that they, along with several other execs, would be entitled to about $200 million in severance payments. There are also thousands of non-executive former employees Musk allegedly wrongfully fired and now refusing to pay severance and other benefits, many of whom have also filed lawsuits against Musk.

Document and Communications Requests

The former execs have requested all documents and communications between Musk and any Twitter director or executive pertaining to any of them, all communications about their job performance, and their termination. Musk, however, argued that the documents should be focused only about the company.

The plaintiffs said their communication requests are critical to the case “because Musk’s communications relating to plaintiffs, including plaintiffs’ job performance and terminations, shed light on Musk’s subjective motivations and intent in terminating their employment,” reported Law360. As well, “Defendants have never disclaimed that such documents exist…To the extent they exist, they are relevant, and defendants should produce them,” the group said.

The case is Agrawal et al. v. Musk et al., case number 3:24-cv-01304, in the U.S. District Court for the Northern District of California.