Former Twitter board member sues Elon Musk’s X for $20 million in pay
Mr. Kordestani received the majority of his compensation as stock when he joined Twitter’s Board in 2015. He also helped oversee the sale to Mr. Musk, in 2022. A public battle between a former member of a board and the company he helped manage is rare. Most boardroom disputes are resolved quietly behind closed doors. The lawsuit was filed by Mr. Kordestani, the highest ranking Twitter leader, but he is not the first to sue Mr. Musk. Twitter’s former chief executive, chief financial officer, and top lawyers have also sued the company to recoup unpaid compensation, and thousands of employees have joined mass arbitration cases that accuse Mr. Musk of wrongfully terminating them and refusing to pay proper severance.
The former top executives have accused Mr. Musk of withholding severance payments that they said were automatically owed when he acquired the company. After the takeover, Mr. Musk laid off thousands of employees en masse and offered limited severance, which the former employees have argued was less than what they were due under their employment contracts.
The acquisition is also the subject of an inquiry by the Securities and Exchange Commission, which has said that Mr. Musk failed to properly disclose purchases he made of Twitter stock as he accumulated a controlling stake in the company before beginning his takeover bid. Last year, the regulator filed a lawsuit against Mr. Musk in order to force his testimony. Mr. According to Mr. Kordestani’s legal filing, Twitter’s board asked him to become the company’s chief executive in 2015. Jack Dorsey was the interim CEO of Twitter at the time. However, the board was concerned that his attention would be divided between Twitter and Square, his payments company. Kordestani agreed, but not to be the chief executive. Kordestani took on the role of executive chairperson on the board, and mentored Dorsey who was appointed permanent chief executive. By the time Mr. Musk called, Mr. Kordestani had 800,000 options worth over $20 million. According to Mr. Kordestani, the agreement Mr. Musk had signed to purchase the company stated that these options should have been paid within five days after the close of the transaction. The former board member also received additional stock payouts scheduled for the months after the acquisition, totaling nearly $3 million. The agreement for Mr. Musk stipulated that he would receive stock, but this did not happen, according to the lawsuit.
