Musks Loses Battle and Settles $128M to Former Twitter Executives
Elon Musk’s company X (formerly Twitter) has settled a lawsuit with four former Twitter executives — Parag Agrawal, Ned Segal, Vijaya Gadde, and Sean Edgett — who alleged they were denied $128 million in severance pay following Musk’s 2022 takeover of the social media platform.
The executives claimed that Musk falsely accused them of misconduct to justify terminating their employment and avoiding contractual severance obligations. The dispute traces back to Musk’s $44 billion acquisition of Twitter, during which he initially attempted to back out of the deal, prompting a lawsuit that compelled him to complete the purchase.
Once Musk assumed control, he swiftly fired the top leadership team, asserting that they were responsible for poor management and questionable decision-making. However, the plaintiffs argued that their removal was retaliatory and financially motivated. They stated that their employment contracts guaranteed one year’s salary and substantial stock options that were never paid.
The settlement — announced through a San Francisco federal court filing last week — did not disclose the terms or amount of compensation. Lawyers for both Musk’s X and the former executives declined to comment.
This lawsuit follows several other legal challenges Musk’s company faces post-acquisition. In August 2025, X agreed to settle a separate lawsuit with former rank-and-file employees, who alleged they were collectively owed more than $500 million in unpaid severance following mass layoffs that halved the company’s workforce.
The unresolved wave of litigation highlights ongoing concerns about labor rights, executive contracts, and corporate accountability in the wake of Musk’s aggressive management style and rapid restructuring of X. While Musk maintains that layoffs and executive dismissals were necessary to cut costs and transform Twitter into a profitable enterprise, critics argue that the company’s actions violated long-standing corporate governance and labor practices.
Main Points
- Settlement reached: Musk’s X settled with four former Twitter executives over unpaid severance claims totaling $128 million.
- Executives involved: Parag Agrawal (CEO), Ned Segal (CFO), Vijaya Gadde (Chief Legal Officer), and Sean Edgett (General Counsel).
- Allegations: Plaintiffs claimed Musk used false misconduct accusations to avoid severance obligations.
- Terms undisclosed: The settlement was filed in court, but no financial details were released publicly.
- Broader legal context: X previously settled a $500 million severance case with laid-off employees in 2025.
- Acquisition background: The dispute stems from Musk’s $44 billion Twitter takeover and subsequent layoffs.
Projections
Potential Positive Outcomes (Pro):
- The settlement may bring an end to a high-profile legal battle, allowing X to stabilize leadership focus.
- It could signal a shift toward resolving employee-related disputes and reducing pending litigation.
- The decision may reassure potential investors that legal risks are being managed proactively.
Potential Negative Outcomes (Con):
- Continued lawsuits could harm X’s financial position, as the company reportedly struggles with declining ad revenue and rising operational costs.
- These settlements may embolden further legal claims from other former employees or contractors.
- The case reinforces reputational risks around Musk’s management practices and corporate ethics, potentially impacting future business ventures.
- Lack of transparency in settlement terms may fuel speculation and public criticism of both parties.