Why is Elon Firing Twitter Executives
by Docere
In his takeover of the social network, Elon Musk recently fired executives from Twitter, costing them millions of dollars in severance payments.
After completing the $44 billion takeover on Thursday, according to Reuters, Mr. Musk removed the company's chief executive Parag Agrawal, chief financial officer Ned Segal, former general counsel Sean Edgett, and head of legal affairs and policy Vijaya Gadde. Something not unheard of in the M&A space, especially in a hostile takeover like this.
According to The New York Times, the Tesla CEO fired the executives "for cause," which meant they broke company rules and forfeited the $20 million to $60 million that was due as compensation. Termination can happen for cause or without cause. Generally speaking, an employee who is fired for cause is being terminated for their misconduct. They could have broken the law, violated an important company policy, or made a serious mistake or lapse in judgment that put the company at risk. This means they will be unable to satisfy the conditions set in their golden parachute agreements. It is unclear what Elon’s reasons are for the dismissals but whether or not they were entirely justified will remain to be seen. It does beg the question, who is advising Elon? Was this the plan all along? All remains to be seen.
In the months leading up to the completion of the deal, Mr. Musk repeatedly claimed that the company was poorly run.
However, the reported “for cause” sackings risk triggering a protracted legal battle with the former executives, who were reportedly considering their options over the weekend. A long and tiring legal battle will definitely ensue with the directors presumptively not backing down easily. The burden falls upon twitter to prove the layoffs were justified and whether an ETO reason was present.
This further reinforces Elon’s plans for Twitter to become a place that no longer allows misconduct amongst the leadership as he mentioned in the months leading to the acquisition. Will Twitter fly? or will it fall deeper within the depths of what many are calling the Elon bubble… only time will tell.
