Last update:Nov 03, 2024, 16:42 IST

The executives filed a lawsuit in March, alleging that Musk cut them off before they could formally resign, thereby denying them agreed-upon severance packages.

A judge ruled that Twitter’s former top executives could continue with their claims that Elon Musk fired them precisely at the time of the acquisition’s closing to avoid severance obligations. (File photo)

Elon Musk has encountered a legal setback in his efforts to avoid paying severance payments to former top Twitter executives, who were fired during his acquisition of the company in 2022. On Friday, a judge ruled that former CEO Parag Agrawal and Other top executives could continue with their claims that Musk fired them precisely at the time of the acquisition’s closing to avoid severance obligations.

The executives filed a lawsuit in March, alleging that Musk cut them off before they could formally resign, thereby denying them agreed-upon severance packages. They referenced Musk’s statement to biographer Walter Isaacson, where he expressed the urgency of closing the deal to avoid a “$200 million differential between closing tonight and doing it tomorrow morning.”

Along with Agrawal, former chief legal officer Vijaya Gadde, former chief financial officer Ned Segal and former general counsel Sean Edgett claim they are owed one year of salary and unvested stock awards valued at the acquisition price.

This lawsuit adds to Musk’s extensive legal challenges related to employee compensation following his acquisition of Twitter, now rebranded as X Corp. After Musk implemented large-scale layoffs, many affected employees filed claims for unpaid severance pay, claiming that Musk had violated compensation agreements.

In July, Musk and X Corp. won a class-action lawsuit in which former employees sought $500 million in damages under the Employee Retirement Income Security Act. However, in a separate arbitration case in September, a former employee was awarded unpaid damages, potentially setting a precedent for similar lawsuits.

U.S. District Judge Maxine Chesney, who is overseeing the case, also denied Musk’s motion to dismiss a related claim brought by Nicholas Caldwell, a former general manager of “core technology” who is seeking $20 million in lost damages. .