Elon Musk and X, formerly known as Twitter, have reached a surprising settlement with a group of former top executives, including Parag Agrawal, Ned Segal, Vijaya Gadde, and Sean Edgett. The dispute centered around $128 million in severance pay that the executives claimed had not been paid since Musk took over the company in 2022.
The executives were let go shortly after Musk acquired the social media platform for $44 billion. They were due to receive millions in severance and stock options one day after the takeover. However, they were dismissed within hours, leaving the payouts in question.
The timing of the firings raised eyebrows because all four executives were set to receive significant severance and vested stock options, reportedly totaling around $200 million collectively. Their dismissals occurred just before these payments were scheduled, which became a central argument in the lawsuit.
Settlement Reached Over Withheld Severance
The fired executives filed a lawsuit in 2024. They alleged that Musk withheld their severance as a form of punishment following the acquisition. Legal filings suggested that Musk did not want the executives to receive their payouts after completing the costly acquisition, which he had initially attempted to cancel.
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The lawsuit argued that the reasons listed in the termination letters were not valid, challenging Musk’s claim that the executives were being fired “for cause.” A court order issued in October 2025 confirms that the two sides have reached a settlement. Although the terms of the agreement have not been disclosed, the settlement has already caused delays in scheduled depositions, including one involving Musk, to allow both parties to complete the necessary conditions.
Allegations from a High-Stakes Lawsuit
The lawsuit also referred to portions of the authorized Elon Musk biography by Walter Isaacson, which provided additional context for the executives’ claims. According to the biography, Musk did not want the executives to collect their severance or stock options because he was concerned about the cost of the acquisition and believed that Twitter’s management had misled him.
The biography also noted that Musk pushed for a faster closing of the Twitter sale so he could fire the executives “for cause,” which would have made them ineligible for severance. Agrawal, Segal, Gadde, and Edgett argued that the stated reasons for their firing were unfounded, making the dismissals appear as a strategic move to deny them payments.
The lawsuit emphasized that the executives had legal claims to the $128 million that was withheld. It also highlighted the high-stakes nature of corporate takeovers, where timing and contractual agreements can significantly impact payouts and employee rights.
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Repeated Severance Disputes at X
This settlement is not the first instance where Musk and X faced legal challenges over unpaid severance. In August 2025, a separate group of former employees filed a lawsuit claiming they were owed hundreds of millions of dollars in severance, which also ended in a settlement.
Representatives for the former executives, Musk, and X have not publicly commented on the recent settlement. Court documents confirm that the deal is in place and show that the legal proceedings are temporarily paused to allow the settlement to be completed.
The developments reveal ongoing disputes and tensions surrounding the management transition following Musk’s acquisition of Twitter. The case also reflects the complexities of executive compensation and severance agreements in large corporate deals, where disagreements over payouts can lead to high-profile legal battles.
The court order ensures that the settlement is moving forward, delaying depositions and other litigation steps for now, as both sides meet the conditions required under the agreement.
