Automattic’s interim CEO and legal chief signed reciprocal severance deals during Mullenweg’s brief ouster

If you are an executive at a company where board governance is unstable, your severance package might be worth millions, but only if you are fired.

During a brief 33-hour period when Automattic CEO Matt Mullenweg was ousted by the board, interim CEO Mark Davies and Chief Legal Officer Andy Missan signed reciprocal severance deals. These agreements, worth an estimated $8.15 million combined, include 12 months of base salary, accelerated equity vesting, and extended health coverage. Mullenweg returned to power shortly after and subsequently fired Davies and Missan. The severance terms are generous, requiring the company to meet a narrowly defined 'cause' standard to avoid payout and providing executives a window to cure any alleged misconduct. Davies' agreement also stipulated that his removal from the interim CEO role would not constitute 'Good Reason' for severance as long as he remained CFO. Automattic's legal team is now evaluating the validity of these agreements, while new counsel has been appointed. Davies reportedly sold his Automattic stock months prior to his departure.

The reciprocal severance deals signed by Automattic's interim CEO and legal chief highlight a potentially aggressive approach to executive protection during internal power struggles. By entrenching themselves with significant financial safeguards and narrowly defining 'cause' for termination, these executives appear to have anticipated an adverse outcome following their actions. This move also suggests a sophisticated understanding of corporate governance loopholes, where executives might leverage critical moments of board instability to secure personal financial benefits. The substantial payout, including accelerated equity, signals a high level of confidence in their future compensation, regardless of the company's internal turmoil.

The situation at Automattic raises questions about the alignment of interests between leadership and the board, particularly when facing potential litigation or governance challenges. The CFO's reported stock sale preceding the ouster adds a layer of complexity, fueling speculation about strategic decision-making and potential conflicts of interest. As Automattic navigates the legal validity of these severance agreements, the outcome could set a precedent for how executive compensation and protections are handled during turbulent board dynamics in the tech sector. Investors and stakeholders will likely scrutinize such arrangements to ensure they prioritize long-term company health over individual executive enrichment.