Omid Kordestani, former Twitter chairman, has filed a lawsuit against X Corp., the company formerly known as Twitter, claiming that Elon Musk is refusing to cash out more than $20 million worth of shares he is owed.
TakeAway Points:
- Former Twitter chairman Omid Kordestani claims Elon Musk is withholding his stock pay and is suing X Corp. for $20 million in shares.
- Senator Elizabeth Warren raises concerns with the Tesla board about Musk’s possible conflicts of interest, specifically with regard to allocating resources to SpaceX and artificial intelligence.
- Following a 50% decrease in X Corp.’s ad sales since Musk’s acquisition, GARM folds in response to X Corp.’s lawsuit, which accuses the organisation of an illegal ad boycott.
Kordestani files a lawsuit against X Corp.
Kordestani, who served as the executive chairman from 2015 to 2020 and remained on the board until Musk’s acquisition of the platform for $44 billion, alleges that the bulk of his compensation was in stock, which Musk is now withholding.
Lawyers for Kordestani argue that X Corp. is attempting to “reap the benefits of Mr. Kordestani’s seven years of service to Twitter without paying him for it.” This lawsuit, filed in California Superior Court in San Francisco, is the latest in a series of legal actions taken against Musk by former Twitter executives. In March, four ex-executives sued Musk for allegedly withholding more than $128 million in severance payments after they were ousted from the company. X Corp. has declined to comment on the matter.
Before his tenure at Twitter, Kordestani was a long-time business leader at Alphabet Inc.’s Google.
Concerns with Telsa Board
Senator Elizabeth Warren has raised concerns about Elon Musk’s use of Tesla resources to benefit his other ventures, including SpaceX and xAI. In a 10-page letter to Tesla Chairwoman Robyn Denholm, Warren questioned whether the Tesla board has investigated Musk’s potential conflicts of interest. “Tesla’s Board of Directors appears to be failing to meet its fiduciary duties to Tesla’s shareholders by neglecting to address company CEO Elon Musk’s apparent conflicts of interest,” Warren wrote.
Warren’s concerns include Musk’s formation of the AI startup xAI outside of Tesla, his threats to work on robotics and AI outside of Tesla if he didn’t receive more voting control, and his encouragement of Tesla shareholders to approve a $5 billion investment in xAI. Additionally, Warren pointed to Musk’s alleged redirection of Nvidia AI chips originally slated for Tesla to X Corp. and xAI’s poaching of Tesla employees.
Warren has asked Denholm and Tesla to provide answers by August 23. A spokesperson for Warren’s office confirmed that Tesla has not responded to previous letters. Tesla did not respond to a request for comment.
GARM dissolves following X lawsuit
The Global Alliance for Responsible Media (GARM), a coalition of advertisers, dissolved on Thursday following a lawsuit filed by Elon Musk’s X Corp. against the organization. Established in 2019 by the World Federation of Advertisers, GARM included members such as Nike Inc., McDonald’s Corp., and Procter & Gamble Co. The coalition provided guidelines for brand safety controls to prevent harmful content from appearing next to advertisements.
X Corp. filed the lawsuit on Tuesday, claiming that GARM was responsible for an “illegal” advertising boycott in 2022, shortly after Musk took over the company. A GARM spokesperson said the organization would issue a statement regarding its closure but declined to provide further details.
Musk has a history of filing lawsuits against organizations he perceives as threats to X Corp.’s advertising business. Last July, X Corp. sued a nonprofit group that researched online hate, and in November, it sued Media Matters for America after the organization found antisemitic content next to advertisements from major brands. Following these reports, advertisers like Walt Disney Co. and Apple Inc. pulled their ads from the platform.
Lou Paskalis, a former ad executive now running the consultancy firm AJL Advisory, described Musk’s decision to sue GARM as “extraordinary” and said the group’s closure would have a “chilling effect” on the industry. “I’m enraged by this,” he said. X Corp.’s advertising business has declined by nearly 50% since Musk took over, driven by changes in content safety rules and Musk’s engagement with controversial accounts.
