Former Twitter Chairman sues X for $20 million in debt

Former Twitter Chairman Omid Kordestani sued X, alleging that billionaire boss Elon Musk did not pay the shares worth more than $20 million owed to him.

The former Twitter chairman sued X for $20 million in stock. Photo: Bloomberg.

Kordestani served as the company executive chairman from 2015-2020 and stayed on the board for another 2 years, overseeing the process of selling the company to Musk in 2022. Writing in the complaint, he said the majority of his compensation came from stocks. But after Musk bought Twitter, now known as X, the billionaire refused to pay Mr. Kordestani those shares.

Lawyers for the former chairman said social media company X was seeking to “reap the benefits of Mr. Kordestani seven years on Twitter without paying him.”

The lawsuit was filed in California Superior Court in San Francisco.

With his lawsuit, Kordestani became the highest-ranking Twitter leader to take legal action against Musk, but certainly not the first.

Twitter former executive, chief financial officer and top lawyers have also sued the company to recover $128 million in unpaid damages. Thousands of employees are involved in class action lawsuits alleging that Mr. Musk fired them unreasonably and refused to pay severance pay.

After taking over, Musk fired thousands of employees and offered limited severance pay. Former employees claim that this figure is lower than what they are paid properly under the labor contract.

Former board member Omid Kordestan. Photo: David Paul Morris/Bloomberg.

The acquisition of Twitter is also the subject of an investigation by the US Securities and Exchange Commission. The agency claimed that Musk did not disclose exactly the Twitter stock purchases he accumulated before starting the takeover bid. Last year, the agency sued the billionaire to force him to testify on the matter.

Prior to Twitter, Kordestani was a longtime business manager at Google at Alphabet. He was Google 11th employee and went on to become chief business officer, overseeing the transformation into Alphabet, the parent company that owns the search giant YouTube.

In 2015, Twitter board of directors recommended Mr. Kordestani to become its chief executive. At the time, Jack Dorsey, the co-founder of Twitter, was serving as interim CEO. But the board is concerned he is being distracted between Twitter and his newly formed payments company, Square.

Mr. Kordestani agreed to help manage the company, but not as an executive director. Instead, he took on the role of executive chairman of the board and advisor to Jack Dorsey, the permanent chief executive. In 2020, after an investor tried to force Dorsey to resign, Kordestani also left his role as executive chairman and took on a permanent seat on the board.

At the time of Musk buyout bid, Mr. Kordestani was holding 800,000 stock options worth more than $20 million. According to the agreement the Tesla CEO signed to buy the company, those options were supposed to be paid within 5 days of the end of the deal.

According to the lawsuit, the former board member received $3 million — an additional payment in stock, which was scheduled to be paid in the months following the deal. The lawsuit says Musk’s deal pays that the stock will also be paid, but this is not the case.

“Currently, X refuses to meet those obligations, adding to a long list of unpaid funds under Musk’s management,” the lawsuit reads.