After buying Twitter, probably the first thing that Elon Musk did was to fire its CEO Parag Agrawal and the company’s policy chief Vijaya Gadde. Now he may have to pay the two senior executives around $120 million compensation, which translates to around Rs 1000 crore.
By Abhik Sengupta: Elon Musk has bought Twitter after months of drama. And as expected, immediately after getting the company he fired its CEO Parag Agrawal and its policy chief Vijaya Gadde, along with Twitter CFO Ned Segal. But it is an eventuality that everyone saw coming, probably also Twitter. And the company, to ensure that its senior executives do not get the wrong end of the deal, had prepared generous severance terms for them. Now, there is a lot of buzz around how much money Agrawal would get from Twitter or how much Gadde will receive. There are a lot of figures out there. So, we checked Twitter’s SEC filings and found the official numbers.
And the numbers are simple: In total, it seems that Agrawal would get around $67 million (roughly Rs 552 crore) from Twitter now that he has been fired. Whereas Gadde will be eligible to $54.7 million (roughly Rs 450 crore). Combined, this is around $120 million (around Rs 1000 crore). This is according to the SEC filing made by Twitter in July this year.
Now, there is always a chance that Elon Musk may refuse to pay this money, citing some clause or rule in employment contract. But if that happens, chances are that there will again be court case, somewhat like what happened in the last few months when Musk went back on his agreement to buy Twitter and the company management then dragged him to court. Just to make it clear: As the trial neared, Musk changed the mind again and told the court that he would buy Twitter.
Coming back to the point of the severance package of Agrawal and Gadde: Twitter’s deal terms with Musk on the SEC website note that the top three fired execs – Agrawal, Gadde, and former CFO Ned Segal will receive special compensation under the “Golden Parachute Compensation”. The document states:
“Under the severance policy and the Agrawal offer letter, upon an involuntary termination during the applicable COC (Twitter’s Change of Control period), each of the NEOs (Twitter executive officers) would be entitled to receive a cash amount equal to 100 per cent of the NEO’s annual base salary, which is in each case payable in a lump sum on the 61st day following the involuntary termination.
Beyond the severance, direct stocks held by Agrawal, Gadde, and other fired leaders will be bought back for $54.20 (roughly Rs 4,500) per share. The SEC filing shows that Agrawal owns 128,753 direct shares worth $6,978,413, and Gadde’s 623,156 direct stocks are worth $ 33,775,055.
Additionally, stocks held unvested shares (RSUs and PSUs) by former Twitter execs are also going to be vested, which are again worth millions. A rough estimate shows that Musk has to pay over $100 million to Agrawal and Gadde because he fired them after getting Twitter.