Do you want to know the secret to wealth? Go into business, buy up companies, and just never pay for them or your employees. At least that is the model Elon Musk seems to be running off. The owner of X, formally Twitter, is already being sued by several of the company’s former employees, landlords, and vendors due to alleged nonpayment.
Four Twitter ex-executives have now filed a lawsuit with the California federal court seeking more than $128 million in unpaid severance.
These executives include former chief executive Para Agrawal, along with Ned Segal, Vijaya Gadde, and Sean Edgett. All of them helped draft the lawsuit against Musk when he tried to back out of buying Twitter for $44 billion. They are claiming they were fired for gross negligence and willful misconduct, unfairly, to get around paying them benefits. They believe this was done because Musk holds a “special ire” against them for forcing the sale. The lawsuit also claims that they violated the Employee Retirement Income Security Act.
“This is the Musk playbook: to keep the money he owes other people, and force them to sue him,” says the complaint. “Even in defeat, Musk can impose delay, hassle, and expense on others less able to afford it.”
Soon after Musk bought Twitter, he fired several executives, and about half of the platform’s employees. Several of these terminated employees are now suing over claims that they weren’t paid severance, which they were due. Many vendors also said they were not paid either. There was also the times Musk and co failed to pay rent on the San Francisco headquarters of the company. In total, roughly 30 lawsuits are going against X for nonpayment.
This particular lawsuit alleges Musk devised a scheme to cheat these employees out of severance by accelerating the deal’s close. Then, fabricating cause terminations before anyone could resign and still receive benefits. The issue here is these executives’ contracts had the standard “good reason” provisions for termination. And one of those conditions includes Twitter becoming a privately-held company.
Their termination letters said they were fired over failure to cooperate with a government or internal investigation. However, these letters provided no specific claims about how they weren’t compliant. According to the suit, the company denied the executives’ claims for severance last year. In this instance, they were told that they were fired for gross negligence and willful misconduct. Claims that seemingly center around paying retention bonuses and success fees to an unidentified/redacted party.
These bonuses were paid to the party for “their work in negotiating, litigating and closing the acquisition,” of the company. Most are assuming that the unidentified recipient is Wachtell Lipton Rosen & Katz, who represented the company in making Musk follow through with the acquisition he initiated. Also, last year Twitter sued the firm for allegedly taking advantage of a client “left unprotected by lame duck fiduciaries who had lost their motivation to act in Twitter’s best interest pending its imminent sale.” With X seeking $90 million in restitution for the bill.
You can read the full filing here.
