Report: Musk Doesn't Want To Pay Golden Parachutes

Elon Musk’s deal to buy Twitter may have closed, but his battle with the company’s board and executives seems to be barreling forward. After what The NY Times' DealBook hears was a bitter closing on Thursday, Musk is taunting Twitter and the law firm it worked with in its lawsuit against him, Wachtell Lipton, with the prospect of litigation, while trying to avoid paying top executives the golden parachutes they’re owed. It appears that fraught legal battles lie ahead, and it’s unclear whether Musk’s aim is to win or simply punish.

“I would not be surprised at all if there are lawsuits involving everything from compensation to people he feels have withheld information illegally from him,” Walter Isaacson, the Musk biographer who shadowed him throughout much of last week, said on CNBC.

Musk is trying to get out of paying senior executives’ golden parachute deals. Here’s how that could shake out: Musk fired the executives purportedly “with cause” in hopes of avoiding payment. But it’s unclear what the cause might be. (Twitter itself has set a high bar for such firings, like unauthorized use of Twitter’s confidential information or pleading guilty to a felony.)

If the Twitter executives sue for the payments, it would likely go to arbitration. Based on the facts we know, it would seem they have a strong case.

The executives would have to pay their own legal costs. They could be reimbursed for at least some of them, as the employment contract of the former C.E.O. Parag Agrawal shows. But Musk could try to get out of that as well.

Musk could go after the board (and possibly executives) for fraud. It might look like this: Musk would sue the directors arguing they defrauded him into buying Twitter, similar to what Hewlett-Packard did in 2015. But Musk would need to prove Twitter materially and intentionally misled him. Simply not telling him things doesn’t count as fraud.