Episode Details

On September 9, 2026, Automattic’s board voted to place founder and chief executive officer Matt Mullenweg on paid leave, named chief financial officer Mark Davies interim chief executive officer, and by the next afternoon watched Davies and chief legal officer Andy Missan sign each other a combined $8.15 million severance package. Automattic reversed the vote inside thirty three hours, confirmed on September 12, 2026, that Mullenweg remained chairman and chief executive officer with the board’s full support, and then fired both executives before either could act on the terms they had just written for each other. Nobody at Automattic has explained why the board acted in the first place, and nobody has explained why reversing course took barely a day. What the public record does show is a severance agreement signed by two officers for each other, with no independent director named anywhere in the process, and that detail is the part every venture backed board should study.

Delaware law makes the initial move easy to explain even without a stated reason. Section 142(b) of the Delaware General Corporation Law lets a board remove a corporate officer at any time, with or without cause, because an officer holds the position at the board’s pleasure rather than for a fixed term. That is different from removing a director, which under Section 141(k) usually requires a stockholder vote. A board can act on a chief executive officer inside a single meeting, and Automattic’s board did exactly that on September 9, placing Mullenweg on leave and handing the role to Davies without, as far as any public account shows, disclosing why.

The harder question is what authority Davies held once he had the title. Delaware law lets a board narrow an interim officer’s authority by resolution or bylaw the moment it creates the position, but nothing in the public reporting suggests Automattic’s board did that. Left undefined, Davies held the same practical contracting power as a permanent chief executive officer, which is exactly what let him sign a severance agreement for Missan on September 10, one day into the job. Missan, in the same motion, signed Davies’s agreement. Each was interested in the outcome of the contract he was approving, and Delaware fiduciary law does not treat that lightly.

In re Walt Disney Co. Derivative Litigation, 906 A.2d 27 (Del. 2006), is the case every executive compensation lawyer reaches for here. Michael Ovitz left Disney’s presidency after about fourteen months with a severance package worth more than $100 million, and the Delaware Supreme Court found the approval process fell short of best practice, though it stopped short of finding the directors had breached their duty of good faith. Disney, whatever else went wrong, still had a compensation committee sitting in the room. Automattic’s public record names no independent director who reviewed the Davies and Missan agreements before either was signed. In thirty years of drafting and reviewing executive severance agreements for venture backed companies, I have not before seen one where the departing signatory’s own package was approved by the very person whose package he had just approved in return. That is not an accident of drafting. It is what a severance process looks like when nobody independent is left standing.

The terms themselves were not careless. Each package guaranteed twelve months of base salary as a lump sum, accelerated vesting, continued ability to exercise vested options, and a year of company paid health coverage, for a combined $8.15 million. Cause was defined narrowly, with sixty days of notice, thirty days to cure, and a board majority vote required before a for cause termination could take effect. Davies’s agreement even excluded his own removal from the interim role as a trigger for severance, a clause that shows the drafters saw this exact reversal coming and tried to prevent it from paying out twice. What they could not p