Automattic executives entered into reciprocal severance agreements during CEO’s suspension — TechCrunch
Automattic CFO Mark Davis and Chief Legal Officer Andy Missan signed severance agreements for each other during the period when CEO Matt Mullenweg was suspended from his position. As TechCrunch reports, the documents took effect on September 10 — during the 33-hour window between Mullenweg’s suspension and his return to the role.
Automattic’s board of directors placed Mullenweg on paid leave on September 9 without publicly explaining the reasons for the decision. Davis became interim CEO at that time. After returning approximately 33 hours later, Mullenweg fired Davis and Missan, while the board members who voted for his suspension later left the company.
Terms of the severance payments
According to the publication, the agreements provide each of the two executives with a lump-sum payment equal to one year of base salary, accelerated vesting of equity in the company, the ability to exercise vested stock options, and another year of health insurance. The combined value of the package for Davis and Missan, including accelerated equity vesting and one year of salary, amounts to $8.15 million.
The payments are possible provided that the executives sign a broad release of claims against the company and comply with confidentiality, non-solicitation of employees, and other post-termination restrictions.
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Questions over the legal validity of the agreements
The agreements narrowly define grounds for termination without severance. The company must notify the executive in writing of the relevant conduct within 60 days of learning about it, provide 30 days to cure the violation if possible, and then obtain the support of a majority of the board of directors.
Automattic’s legal team is determining whether to pay the stipulated amounts or challenge the legal validity of the arrangements. The company also replaced its previous legal advisers from Gibson Dunn with Stephen Shackelford and Sean J. Rabin of Susman Godfrey LLP.
In a Slack message to employees, Mullenweg accused Davis and three board members of conspiring to hold a vote on his suspension. He said he received only 50 minutes’ notice and had no time to submit the resolution for review by outside lawyers.
