Former Twitter owners sue Elon Musk and demand $129 million in compensation economy

This was a popular demand, although it took almost a year and a half to arrive. When Elon Musk bought the social network, which he later renamed X, Twitter’s former owners, including its CEO Parag Agarwal, had multimillion-dollar protection against dismissal. However, Musk denied paying those severance packages and even claimed to have done so. A master step to advance the completion of operations and fire them appropriately. Now Agarwal and four other directors are demanding $128.6 million (about 119 million euros) in compensation from the social network’s owner in a lawsuit filed in a California court.

The four plaintiffs are Agarwal; CFO Ned Segal; Head of Legal and Content Moderation, Vijaya Gadde, and General Counsel, Sean Edgett. After taking control of Twitter, Musk’s first decision was to fire these four. These executives had been decisive in the legal battle waged against Elon Musk to force him to buy the social network, when he wanted to back out citing all kinds of baseless excuses.

Brochures for the operation already described the shielding of many officers or “golden parachutes”, as the document called them. In the lawsuit, Agarwal claims $57.4 million; Segal, with $44.5 million; Gadde, 20 million, and Edgett, 6.8 million. Director of clients Sarah Personnett, who shielded another $20 million, was not included in the first round of layoffs and is not a party to the lawsuit. The four plaintiffs therefore claim $128.6 million in outstanding compensation, additional equitable relief, interest and legal fees.

This lawsuit is a clear illustration of Musk’s capricious and tyrannical way of doing business. Former executives say the giant showed “particular anger” toward them after it took over the social network in 2022, publicly promising to freeze their compensation and extort about $200 million from the $44 billion operation, According to the lawsuit. The filing was made Monday in federal court in Northern California. Reason: “He adequately and vigorously represented the interests of Twitter’s public shareholders during Musk’s illegal attempt to renege on the agreement. For his efforts, Musk promises revenge for life,” says the lawyer for Agarwal and other former executives in the 39-year-old lawsuit, to which EL PAÍS had access.

“Under Musk’s control, Twitter has become a criminal, defrauding employees, landlords, suppliers and others. He added, “Musk doesn’t pay his bills, believes the rules don’t apply to him, and uses his wealth and power to crush anyone who disagrees with him.”

The lawsuit echoes the description of the acquisition made in Walter Isaacson’s biography of Musk, in which the early shutdown of the operation was presented as a masterstroke to avoid paying compensation. “As he was closing the acquisition, Musk told his official biographer, Walter Isaacson, that he would haunt every executive and director of Twitter ’til the day they die.’ These statements were not merely the ramblings of a self-obsessed billionaire surrounded by people willing to face the legal consequences of his own decisions.” Musk particularly bragged to Isakson about how he had saved himself $200 million. “Planned to defraud Twitter executives out of their severance pay.”

They point out that “If anyone around Musk had been willing to tell him the truth, they would have learned that his plan (to shut down operations and resign due to a change in control) before he could fire him as a fair dismissal ) ) Depriving plaintiffs of their contractual indemnities was a futile effort that would not stand up to legal scrutiny.

They point out that in compensation schemes the “reason” for fair dismissal is limited to very limited circumstances, such as conviction of a serious crime or gross negligence or willful misconduct. But “board-approved business decisions that Musk doesn’t like” from a time before his ownership of the company does not serve as a justifiable reason.

Also in early December, a San Francisco judge ruled that he would be paid 50% of the planned amount.

More legal fronts

Elon Musk is facing increasing troubles on the judicial front after a setback when a judge voided the record remuneration of up to $56 billion that the executive was awarded to Tesla through the board. Now, the lawyers who managed to quash that package have asked the judge to award $5.6 billion worth of company shares in legal fees, which is 10% of the lawsuit amount. If approved, it would be the largest compensation of its kind. Lawyers in cases arising from the Enron bankruptcy collected a record $688 million in legal fees in 2008. Lawyers say the amount is fair because they would not have been paid had they lost and Tesla has benefited from the cancellation of the remuneration package. It happened on a large scale.”

For his part, Musk last week filed a lawsuit against OpenAI, the company responsible for ChatGPIT, its CEO Sam Altman, and other senior executives of the organization, such as Greg Brockman (OpenAI’s president), for abandoning the mission. The origin of the company he co-founded: To contribute to the development of artificial intelligence (AI) in a selfless, non-profit manner for the benefit of humanity.

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