According to Walter Isaacson's new biography of Elon Musk, immediately after closing the deal that took Twitter private, Elon Musk's assistant delivered letters of dismissal to the Twitter CEO and other top management before they could submit their resignation letters. These were firings "for cause" that prevented them from vesting their stock options, collectively worth $200 million.
Here are the relevant passages from the book:
But Musk did not want that, and he secretly hatched a plan with his team that would disrupt things. Throughout Thursday afternoon, he wandered in and out of a cramped conference room where Antonio Gracias, Alex Spiro, Jared Birchall, and a few others methodically planned a jiu-jitsu maneuver: they would force a fast close on Thursday night. If they timed everything right, Musk could fire Agrawal and other top Twitter executives “for cause” before their stock options could vest.
It was somewhat audacious, even ruthless. But it was justified in Musk’s mind because of the price he was paying and his conviction that Twitter’s management had misled him. “There’s two-hundred million differential in the cookie jar between closing tonight and doing it tomorrow morning,” he told me late Thursday afternoon in the war room as the plan unfolded.
At 4:12 p.m. Pacific Time, once they had confirmation that the money had transferred and the necessary documents had in fact been signed, Musk and his team pulled the trigger to close the deal. Jehn Balajadia, a longtime Musk assistant who had been reenlisted to help with the Twitter takeover, delivered at precisely that moment letters of dismissal to Agrawal, Ned Segal, Vijaya Gadde, and general counsel Sean Edgett. Six minutes later, Musk’s top security officer came in to say that all had been “exited” from the building and their access to email cut off.
The instant email cutoff was part of the plan. Agrawal had his letter of resignation, citing the change of control, ready to send. But when his Twitter email was cut off, it took him a few minutes to get the document into a Gmail message. By that point, he had already been fired by Musk.
“He tried to resign,” Musk said.
“But we beat him,” Spiro replied.
Twitter also covered Agrawal with a Change of Control and Involuntary Termination Protection Policy which defines “cause” as including “gross negligence or willful misconduct in the performance of your duties”.
Finally, in September 2022, there was Twitter whistleblower who testified to Congress about Parag and other top management, saying that
the Company leadership misled its Board of Directors, regulators, and the public. Twitter’s security failures threaten national security, compromise the privacy and security of users, and at times threaten the very continued existence of the Company. I also detail that despite these grave threats, Twitter leadership has refused to make the tough but necessary changes to create a secure platform. Instead, Twitter leadership has repeatedly covered up its security failures by duping regulators and lying to users and investors.
What would qualify as a valid cause for the firings? Is the Whistleblower’s testimony and report relevant in determining cause? How would Elon Musk's firing action hold up in court?
We have not yet heard about any lawsuit by Agrawal and top other executives to force Elon Musk to pay them the golden parachute packages that were due them if they were improperly fired for cause. Is this strange? It is likely that Agrawal and the other top executives secretly settled with Elon Musk to get all or some portion of the golden parachute packages they would have gotten had they not been properly fired for cause? Or is it more likely that they are reluctant to sue Musk/X/Twitter for their golden parachute packages because the Whistleblower report may weaken their case and embarrass them in court?