Automattic Reviews $8.15M in Executive Severance Agreements
Automattic is assessing whether it must honour or challenge severance arrangements worth a combined $8.15 million for CFO Mark Davies and Chief Legal Officer Andy Missan. The agreements were signed during the roughly 33 hours in which CEO Matt Mullenweg was on paid leave and Davies served as interim CEO.
Automattic’s board voted on September 9 to place Mullenweg on leave, without publicly explaining the decision. Mullenweg said in a company-wide Slack message that CFO Davies and three directors had conspired to force the vote, that he received 50 minutes’ notice, and that he was not given time for outside legal counsel to review the resolution. He returned to the CEO role about 33 hours later.
Davies and Missan signed each other’s severance agreements, effective September 10. Mullenweg subsequently fired both executives. The company’s legal team is now considering its next steps, including whether to pay the amounts or contest the agreements’ legal validity.
Terms signed during the interim leadership period
The documents reviewed by TechCrunch provide each executive with 12 months of base salary as a lump-sum payment, accelerated equity vesting, the ability to exercise vested stock options, and a further year of health coverage. Benefits depend on signing a broad release of claims and continued compliance with confidentiality, nonsolicitation and other post-employment obligations.
The agreements also establish restrictive conditions for a termination for cause. Automattic would have to provide written notice within 60 days of learning of relevant conduct, allow 30 days to cure conduct where that is possible, and obtain a majority board finding that cause exists.
Cause is narrowly defined as gross negligence that materially harms the company; knowing dishonesty, fraud or misrepresentation causing material harm; a material legal violation causing material harm; a material confidentiality or intellectual-property breach; or a felony or crime involving moral turpitude.
Governance dispute and legal context
Davies’ agreement states that removal from the interim CEO position is not “Good Reason” provided that he remains CFO. This limits his ability to claim severance merely because the temporary chief executive role ended, while indicating that the document addressed the specific circumstances of his interim appointment.
The leadership turmoil intensified after Automattic board members left the company following the attempted removal of Mullenweg, while Davies and Missan also departed following Mullenweg’s return. An HR document seen by TechCrunch showed that Davies held no Automattic stock when he left, although he retained a significant number of outstanding vested options.
The events occur while Automattic is in a legal dispute with hosting provider WP Engine. In July, WP Engine alleged in filings that Mullenweg destroyed evidence in messages sent through Signal, WhatsApp and Telegram. The board action could be viewed as a response to perceived corporate risk, but Mullenweg has said the board did not state its reason for the vote.
Business implication
For companies facing executive transitions, the episode highlights the importance of clear authority limits, independent approval procedures and documented oversight for severance commitments, particularly when control of the business is contested.