Elon Musk and X Corp, formerly known as Twitter, have agreed to settle a $128 million lawsuit filed by former CEO Parag Agrawal and three other top executives, who claimed they were denied severance payments following Musk’s 2022 takeover of the social media platform.
Settlement details
The terms of the settlement were not disclosed in a September 30 federal court filing, which also pushed back deadlines and postponed a scheduled hearing in San Francisco. A lawyer representing the executives stated, “The parties have reached a settlement and the settlement requires certain conditions to be met in the near term.”
This settlement follows a previous agreement in August in which Musk and X Corp resolved a $500 million lawsuit filed by approximately 6,000 laid-off rank-and-file employees, who alleged that they were denied severance payments after Musk assumed control of Twitter.
Background of the case
Musk acquired Twitter in 2022 after initially attempting to back out of his $44 billion takeover offer, but a Delaware judge ruled against him in several pre-trial decisions. Immediately after the acquisition, Musk fired several top executives, prompting Agrawal, Vijaya Gadde (Chief Legal and Policy Officer), Ned Segal (CFO), and Sean Edgett (General Counsel) to sue over unpaid severance.
Multiple lawsuits have since accused X Corp of labor and workplace violations, including failing to provide severance to thousands of laid-off employees. However, a federal judge in Delaware recently dismissed part of a class-action case alleging wage theft, stating that Musk could not be held personally liable as an “alter ego” of the company.
Implications for Musk and X Corp
The settlement marks another step in resolving legal challenges facing Musk’s ownership of Twitter/X. While the financial terms remain undisclosed, it is expected to bring closure for the former executives and reduce ongoing litigation risks for the company.
Conclusion
With the settlement in place, Musk and X Corp can focus on operational and strategic priorities without the cloud of high-profile severance lawsuits. Legal experts note that the agreement could also set a precedent for handling executive severance disputes in large-scale corporate takeovers in the United States.