Automattic execs signed $8.15M severance deals amid ouster

On September 9, Automattic’s board voted to put CEO Matt Mullenweg on paid leave, a decision it still hasn’t explained publicly. In a company-wide Slack message, Mullenweg accused CFO Mark Davies of conspiring with three board members behind his back to force the vote, saying he was given only 50 minutes’ notice and denied time to have the resolution reviewed by outside counsel. He returned to the role about 33 hours later, and the board members who voted him out have since left the company.

In that roughly 33-hour window, two key executives signed generous severance agreements for each other. Davies, who became interim CEO, and Chief Legal Officer Andy Missan each signed the other’s agreement, effective September 10. The deals — effectively golden parachutes — give each of them 12 months of base salary as a lump sum, accelerated equity vesting, the ability to exercise vested stock options, and another year of health coverage. Combined, the package comes to $8.15 million that Automattic would now owe both executives, since Mullenweg fired them upon his return. The company’s legal team is deciding whether to pay the sums or challenge their validity, and has replaced its outside counsel with Susman Godfrey LLP.

The agreements narrowly define “cause” — the standard a company must meet to fire someone without owing severance — in the executives’ favor: Automattic must notify the executive in writing within 60 days of learning of the conduct, give 30 days to cure it if curable, then secure a majority board vote that cause exists. Davies’ agreement also specifies that losing the interim CEO title won’t count as grounds for him to resign and still collect severance, as long as he remains CFO — suggesting it was drafted with his exact situation in mind. An HR document shows Davies held no Automattic stock at his departure, though one source says he sold shares a few months earlier; TechCrunch couldn’t confirm the timing, and he still held a large number of vested options.

The episode admits two readings. The board may have been managing an internal leadership crisis and shielding executives from fallout — a framing that could matter given Automattic’s separate legal fight with hosting provider WP Engine, which in July accused Mullenweg, in court filings, of destroying evidence via messaging apps. Or, as Mullenweg himself suspects, the board may have tried to create a window of control for another reason, such as a strategic transaction — a theory fed by the lack of any stated explanation and by Davies’ stock sale. Automattic has been asked for comment; attempts to reach Missan and Davies were unsuccessful.

Why it matters

The episode leaves Automattic weighing whether to honor or fight $8.15 million in severance struck by executives during a governance crisis, just as the company navigates a separate evidence-destruction dispute with WP Engine that could shape how a court views its conduct.