Docs: Automattic interim CEO Mark Davies and CLO Andy Missan signed each other's severance packages worth $8.15M during Matt Mullenweg's brief ouster as CEO

Automattic will owe executives $8.15 million if severance packages are upheld.

Automattic's interim CEO Mark Davies and Chief Legal Officer Andy Missan signed reciprocal severance agreements worth a combined $8.15 million during a brief 33-hour period when CEO Matt Mullenweg was ousted. Mullenweg accused Davies of conspiring with board members to force his removal, stating he had insufficient notice and no time to consult legal counsel. Upon his return, Mullenweg fired both Davies and Missan. The severance packages include 12 months of base salary, accelerated equity vesting, and an additional year of health coverage. The agreements stipulate that the executives receive benefits only if they sign a broad release of claims and comply with post-employment restrictions, with 'cause' for termination narrowly defined. Automattic's legal team is assessing whether to pay these sums or challenge their validity, having hired new counsel for the matter.

The reciprocal severance agreements signed by Automattic's interim CEO and CLO during Matt Mullenweg's brief ouster suggest a potential attempt to secure executive compensation amidst internal governance turmoil. The unusually favorable terms, particularly the narrow definition of 'cause' for termination and the executive-favored interpretation, indicate a strategic move to protect themselves should their positions become untenable. This situation highlights the critical importance of robust corporate governance and clear severance clauses, especially during periods of leadership instability, as it directly impacts a company's financial obligations and potential legal battles.

This event underscores the risks associated with power struggles at the executive and board levels, where personal financial security can become intertwined with corporate decision-making. The $8.15 million in potential payouts raises questions about accountability and the appropriateness of such agreements made under duress or questionable circumstances. As Automattic navigates this situation, the outcome will likely influence how other companies structure executive compensation and governance protocols, particularly concerning rapid leadership changes and the enforceability of severance deals executed during such volatile periods.