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Two Automattic executives signed each other's severance in the 33 hours their CEO was out
The reciprocal deals, effective September 10, would cost Automattic $8.15 million now that Matt Mullenweg has fired both men. The company's new lawyers are deciding whether to pay out or contest the documents.
The Product Desk · Product desk
What happened
- Automattic's board voted on September 9 to put CEO Matt Mullenweg on paid leave and has not publicly explained why it did so.
- Mullenweg was back in the job roughly 33 hours later, and the board members who voted him out have since left the company.
- In that window, CFO Mark Davies, who became interim CEO, and Chief Legal Officer Andy Missan each signed the other's severance agreement, effective September 10.
- Mullenweg fired both men on his return, leaving Automattic owing $8.15 million between them for a year of salary plus accelerated equity, per documents TechCrunch reviewed.
- Automattic has swapped counsel Gibson Dunn for Stephen Shackelford and Shawn J. Rabin of Susman Godfrey while it decides whether to pay or challenge the agreements' validity.
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Why it matters
- decision Contesting the payout puts Automattic in the position of arguing that its own chief legal officer bound the company improperly. Paying it validates paperwork executed in the middle of the leadership fight.
- constraint The money is conditional on a broad release of claims and continued confidentiality and nonsolicitation compliance, so paying either executive also closes off what he can say or sue over later.
- exposure Automattic goes into this dispute having lost its CFO, its chief legal officer and, on the evidence of a deactivated account, its general counsel.
- contradiction The same file supports two readings that price very differently: a board shielding executives from retaliation if the intervention failed, or two executives writing themselves cover.
Mullenweg said in a company-wide Slack message that he got 50 minutes' notice of the board vote and was refused time to have the resolution reviewed by outside legal counsel. In the same message he accused CFO Mark Davies of "conspiring" with three board members behind his back to force the vote through, according to TechCrunch [2][3].
The cheaper path for Automattic runs through the agreements' definition of cause, and that definition is built to take time. The company must notify the executive in writing within 60 days of learning about the conduct, allow 30 days to cure it if it is curable, then get a majority of the board to agree that cause exists [12]. Sixty days plus thirty is up to 90 days of process before the board can even vote [2]. Mullenweg fired both men on his return, well inside that window [7].
The conduct that qualifies is narrow: gross negligence that materially harms the company, knowing dishonesty or fraud causing material harm, a material legal violation causing material harm, a material confidentiality or IP breach, or a felony or crime involving "moral turpitude" [13].
Davies' agreement carries one clause tied to the job he had just been handed. Losing the interim CEO role does not count as "Good Reason" for him to resign and still collect severance, so long as he remains CFO. TechCrunch reported that the clause is unremarkable in itself but suggests the document was drafted with his precise circumstances in mind [14]. On the reciprocal signing, TechCrunch wrote that it is not necessarily improper, though noteworthy in the middle of a governance struggle [15].
An HR document viewed by TechCrunch shows Davies held no Automattic stock when he left, and still held a large number of outstanding vested options. One source at the company said he sold the stock a "few months ago", which TechCrunch could not confirm [16]. His agreement gives him accelerated vesting and the ability to exercise vested options [6].
TechCrunch's account covers severance terms, the board vote and the executives' exits, and reports no effect on WordPress releases or on hosting customers [3]. The one product-side thread is Automattic's litigation with hosting provider WP Engine, which TechCrunch said could come into play [18].
For anyone carrying Automattic in a roadmap, the question about a vendor dependency is how you would learn that control of the company had changed hands: a filing you can subscribe to, a customer notice you would receive, or a screenshot someone forwards you. Here, employees learned from a Slack message and everyone else learned from TechCrunch's review of the severance documents [2][6].
What to watch
- Whether Automattic pays the lump sums or asks a court to void agreements its own chief legal officer signed for the company.
- Whether Davies moves to exercise the vested options his agreement covers while the payout remains unresolved.
- Whether the WP Engine litigation pulls the September 10 severance documents into discovery.