Automattic Faces $8.15 Million Severance Fight After Mullenweg’s 33-Hour Ouster
Automattic weighs fighting $8.15 million severance deals CFO Mark Davies and legal chief Andy Missan signed during Matt Mullenweg’s brief 33-hour ouster.
Summary
On September 9, Automattic’s board put CEO Matt Mullenweg on paid leave without publicly explaining why. Mullenweg said CFO Mark Davies conspired with three directors, gave him 50 minutes’ notice and blocked outside legal review. Davies became interim CEO, but Mullenweg returned about 33 hours later, fired Davies and Chief Legal Officer Andy Missan, and removed the directors, who have left Automattic.
During that window, Davies and Missan approved each other’s September 10 severance agreements: 12 months’ base salary in a lump sum, accelerated equity vesting, exercise rights for vested options and another year of health coverage. Salary plus accelerated equity totals $8.15 million. Payment requires broad claim releases and continued confidentiality, nonsolicitation and other post-employment compliance. To establish cause, Automattic must give notice within 60 days of learning of conduct, allow 30 days to cure it when possible and secure a board majority. Cause is limited to materially harmful gross negligence, knowing dishonesty, fraud or misrepresentation, materially harmful legal violations, material confidentiality or intellectual-property breaches, or a felony or crime of moral turpitude. Davies cannot claim good reason merely for losing the interim CEO title if he remains CFO. He held no shares when departing, possibly after an unconfirmed sale months earlier, but retained many vested options.
Automattic is deciding whether to pay or challenge the deals after replacing Gibson Dunn with Susman Godfrey lawyers Stephen Shackelford and Shawn J. Rabin. General Counsel Jordan Hinkes’ account was deactivated, suggesting another departure. One possible rationale is risk control in Automattic’s WP Engine litigation: WP Engine alleged in July that Mullenweg destroyed Signal, WhatsApp and Telegram evidence, while his September 10 X post referenced alleged spoliation. Mullenweg instead suspects an attempted control window for a strategic transaction, but the board’s silence leaves the motive unresolved.
Positives
- 12 months of salary, accelerated equity, vested-option exercise rights and one year of health coverage protect Davies and Missan after dismissal.
- Broad claim releases and continuing confidentiality and nonsolicitation duties could limit Automattic’s post-employment exposure.
- Stephen Shackelford and Shawn J. Rabin of Susman Godfrey now represent Automattic and Mullenweg as the company assesses the agreements.
- Board intervention could demonstrate corporate oversight in the WP Engine case if directors acted over evidence-preservation concerns.
Risks & concerns
- $8.15 million in combined salary and accelerated equity could become payable after Davies and Missan approved each other’s agreements.
- Automattic faces a legal fight because the agreements narrowly define cause and require notice, a cure period and board approval.
- Matt Mullenweg received only 50 minutes’ notice before the unexplained September 9 vote placing him on paid leave.
- WP Engine’s July allegation that Mullenweg destroyed Signal, WhatsApp and Telegram evidence creates potential sanctions, fines or settlement pressure.
- Mark Davies held no Automattic shares when he departed, while the timing of his reported earlier sale remains unconfirmed.