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

On September 9, Automattic's board voted to place CEO Matt Mullenweg on paid leave, a decision that remains unexplained by the board. Mullenweg accused CFO Mark Davies of conspiring with three board members to force the vote through, claiming he was given only 50 minutes' notice and denied time to review the resolution with outside legal counsel.

Mullenweg returned to his role roughly 33 hours later, after which Davies and Chief Legal Officer Andy Missan signed their own reciprocal severance agreements. These agreements, essentially golden parachutes, offer each executive 12 months of base salary paid in a lump sum, accelerated vesting for their equity, the ability to exercise vested stock options, and an additional year of health coverage.

The total package, including accelerated equity and a year of salary, amounts to $8.15 million that Automattic would owe both executives. The company is currently deciding whether to pay these sums or contest their validity. Under the agreements, the executives only receive benefits if they sign a broad release of claims and comply with confidentiality, nonsolicitation, and other post-employment restrictions.

The agreements also define "cause" — the legal standard for firing someone without severance — in a way that favors the executives, making it harder for Automattic to argue for severance. Davies' severance agreement specifically excludes his removal from the interim CEO role as grounds for severance, as long as he remains CFO. While it's not necessarily improper for the executives to sign each other's agreements, the context of the governance struggle at Automattic makes it noteworthy.