Musk’s X quietly settles $128 million lawsuit with ex-Twitter executives over unpaid severance

08 October 2025

A 3D-printed miniature model of Elon Musk and the X logo are seen in this illustration taken January 23, 2025. REUTERS/Dado Ruvic/Illustration

Elon Musk and X Corp have resolved a high-stakes legal battle with four former top-level executives at Twitter who had sued for roughly $128 million in severance payments they claimed were promised but withheld after Musk’s acquisition of the company. Among the plaintiffs were former CEO Parag Agrawal, former CFO Ned Segal, former Chief Legal Officer Vijaya Gadde, and former General Counsel Sean Edgett.

The dispute traces its roots to Musk’s takeover of Twitter in 2022. The ex-executives contended that following the change in control, they were fired without cause and denied severance they were contractually owed—namely one year’s base salary and unvested stock options. They alleged that Musk effectively accused them of misconduct in order to avoid paying out their severance. Musk and X, on their side, had denied wrongdoing and claimed that the executives were dismissed on performance grounds.

The settlement was disclosed in a filing in a federal court in San Francisco, though the specific terms remain confidential for now. A federal judge had postponed upcoming deadlines and a hearing to allow time for the settlement to be completed. This resolution comes on the heels of another major legal settlement: in August, X agreed to settle litigation from rank-and-file Twitter employees who claimed roughly $500 million in unpaid severance following mass layoffs.

The litigation over executive severance had become one of the more visible fault lines in Musk’s consolidation of control over Twitter. The plaintiffs argued that Musk had maneuvered to short-circuit their equity vesting by accelerating the closing of the acquisition and that he retaliated against them when they pressed for enforcement of their contract terms. The case also intersected with broader themes about how far executives can rely on contractual protections when a takeover occurs, and what obligations an acquirer must honor in converting or continuing legacy compensation arrangements.

For Musk and X, the settlement avoids the risk of a court judgment and potential disclosures or damages that could reverberate beyond just this case. Given the confidentiality of the terms, observers will watch whether the deal includes nonmonetary concessions, limits on future claims, or structured payments. The postponement of court dates suggests that both sides wanted time to finalize and perhaps seal the agreement before public scrutiny intensifies.

Beyond the immediate dispute, the settlement underscores how many legal challenges have piled up in the wake of Musk’s acquisition and overhaul of Twitter’s operations. From mass terminations to claims over severance to disputes over governance, Musk’s tenure as owner has been marked by litigation. For critics, the settlement may raise questions about accountability and consistency in how contract rights are enforced under new management. For supporters, it may represent a pragmatic end to a contentious chapter.

In the weeks to come, analysts will be probing whether this settlement signals a shift in how X handles future disputes with former executives, and whether it will affect investor and user confidence. Given the high profile of the individuals involved and the sums at stake, the outcome adds another layer to the evolving story of Musk’s reinvention of a platform once known as Twitter.