“Payment upon delisting” employment contract basis
1 year salary, stock options, special severance pay equivalent
The New York Times (NYT) reported on the 4th (local time) that former executives of Twitter, which was acquired by Tesla Chairman Elon Musk, filed a lawsuit against Musk for severance pay worth $128 million (about 170.6 billion won).
When Musk acquired Twitter for $44 billion (approximately 58.652 trillion won), he fired CEO Parak Agrawal, CFO Ned Siegel, legal director Vijaya Gade, and general counsel Shaw Edget, and changed the company name to X.
The executives signed an employment contract that would receive severance pay if Twitter was delisted, and Musk filed a lawsuit seeking severance pay when Twitter was delisted in October 2022. The lawsuit will be heard in the U.S. District Court for the Northern District of California.
The requested severance pay is the sum of one year’s salary plus unexercised stock options. CEO Agarwal’s annual salary was $1 million, and stock options granted in stages were $12.5 million. Additionally, in case of involuntary dismissal, the employee was to receive a special severance pay of $60 million. Similarly, CFO Segal was supposed to receive $45 million in compensation, and Gade’s legal director was supposed to receive $21 million in compensation.
When he acquired Twitter, Musk said he could “rightly” fire executives and avoid paying them severance pay. Musk told his biographer Walter Isaacson that he could save $200 million by not paying executives’ severance pay. Musk also said he will hold executives accountable “until the day I die.”
In relation to this, the plaintiff’s lawyer said in the statement of reasons submitted to the court, “Musk’s behavior is to make people file lawsuits without paying back the money they owe, and then even if he loses, he delays payment, makes it difficult, and incurs costs for those who have difficulty handling the lawsuit.” He said.
Twitter executives previously sued Musk for legal fees incurred in responding to the investigation into them, and in October of last year, a Delaware state court ordered Musk to pay $11 million.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.