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Automattic executives signed reciprocal severance deals during Matt Mullenweg's brief ouster
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CFO Mark Davies and legal chief Andy Missan approved each other's exit packages totaling $8.15 million while CEO Matt Mullenweg was on paid leave.
The company must now decide whether to pay these sums or challenge the legal validity of agreements signed by executives who were acting as each other's signatories. This creates a financial and legal liability following a brief internal governance struggle.
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The severance packages include 12 months of base salary, accelerated equity vesting, and a year of health coverage.
The agreements define cause narrowly as gross negligence, fraud, or material legal violations that cause material harm to the company.
Automattic has replaced its legal counsel with Susman Godfrey LLP to determine the next steps regarding these payments.
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What the cluster adds up to.
During a 33-hour window where Matt Mullenweg was placed on paid leave by the board, Mark Davies and Andy Missan signed reciprocal severance agreements. Davies served as interim CEO during this period. Upon his return, Mullenweg fired both executives, triggering the potential payout of $8.15 million in salary and accelerated equity.
The cost of these agreements is high, but the payout is conditional. The executives must sign a broad release of claims and adhere to confidentiality and nonsolicitation restrictions to receive the benefits. The documents also include a cure period of 30 days if the company attempts to fire them for cause.
The validity of these deals is currently under review by new legal counsel from Susman Godfrey LLP. The company previously used Gibson Dunn, but that relationship has ended. Additionally, the general counsel's account was deactivated, though the reason for this remains unclear.
The timing of these agreements coincides with a broader governance conflict and an ongoing legal battle with WP Engine. Some interpretations suggest the board may have been attempting to mitigate corporate risk related to allegations that Mullenweg destroyed evidence in that litigation.
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