Former Twitter Employee Files Lawsuit Over Revoked Stock Options

An former Twitter Inc. manager who was fired as part of billionaire Elon Musk's revamping of the social-media platform claims the company improperly canceled some stock options he had.

John Barnett, the founder of Chroma Labs, has accused Twitter of violating the terms of a restricted stock agreement that he received as part of Twitter's acquisition of Chroma Labs, according to a lawsuit that was unsealed on Wednesday in Delaware Chancery Court.

Barnett, a staff-product manager, was terminated by email in November after expressing support for other colleagues who were fired by Musk as part of his efforts to cut costs. Barnett claims that Twitter is losing $4 million per day. The lawsuit was originally filed on December 16.

Twitter wrongfully cancelled Barnett's options in violation of the pact linked to the Chroma deal, causing him to suffer irreparable harm, according to the 23-page complaint. Twitter officials didn't immediately return an email for comment sent Wednesday after regular business hours.

This suit is one of many legal actions taken by former Twitter employees who were fired after Musk took over the company in October. Some of Barnett’s ex-colleagues contend in a California suit that Twitter failed to give proper layoff notices and is shortchanging them on severance pay.

After Musk bought the social media company for $44 billion, he fired half the workforce, asked some essential employees to return, rolled back its expansive work-from-home policy, and called on workers to sign a pledge to remain "extremely hardcore" at Twitter or quit. He's threatened to put the company into bankruptcy because of more than $3 billion in losses.

Twitter acquired Chroma Labs in 2020, and Barnett joined the company as part of the deal. He was awarded stock options as part of the acquisition, which could only be canceled if he was fired for wrongdoing. The number of options was not disclosed in the suit.

The suit alleges that Barnett was supposed to be able to get $54.20 per unvested option, the same price that Musk paid Twitter shareholders for their stock when he acquired the company.

After Barnett expressed support for Eric Frohnhoefer, a Twitter software engineer who was fired after getting into a public spat with Musk over the app's alleged slowness in some countries, the manager said Twitter sent his termination notice to his wife's email address. Barnett's lawyers said that Twitter never sent the email to Barnett himself, and noted that his wife is not a Twitter employee.

According to a lawsuit filed by Barnett, Twitter failed to pay him for his unvested stock options when it terminated his employment. Barnett is now asking a Delaware judge to order Twitter to comply with the terms of the stock-award agreement and pay him what he is owed.

The case is John Barnett v. Twitter, 2022-1163, Delaware Chancery Court (Wilmington). This is a case involving a dispute between Mr. Barnett and Twitter over the terms of their contract.