Can My Executives Approve Each Other’s Severance Packages?

Your CFO and general counsel just signed off on each other’s severance agreements. You were not in the room. Are you on the hook anyway?

That just played out at a real company, with a board and investors, and it is still unresolved.

On September 9, 2026, Automattic’s board voted to place CEO Matt Mullenweg on paid leave. Mullenweg says he got 50 minutes’ notice and no chance for outside counsel to review it. He was reinstated 33 hours later, and the board members behind the vote have since left.

During that window, CFO Mark Davies, who became interim CEO, and Chief Legal Officer Andy Missan each signed the other’s severance: 12 months of base salary, accelerated vesting, and an extra year of health coverage. Mullenweg fired both on his return, and Automattic now owes, or is fighting, $8.15 million combined.

“Self-Approved” Severance Is Exactly What It Sounds Like

Two officers approving each other’s exit packages, with no independent board sign-off, is a conflict of interest by definition. If the people setting the terms are the same people receiving them, the deal is built to be challenged later.

Who Actually Has Authority to Approve Executive Severance

Most executive agreements route severance through the board or a comp committee, not officers acting on each other’s behalf. If yours are silent on this, that silence is the gap someone exploits during exactly this kind of chaos.

The “Cause” Clause Is Where the Real Leverage Sits

A well-drafted contract does not let a company fire someone “for cause” on a whim. It usually requires:

• Written notice of the alleged misconduct
• A cure period if the issue is fixable
• Majority board approval before termination takes effect

Those protections exist to stop rash firings, but they also block a company from undoing severance it dislikes without meeting its own bar.

A Governance Vacuum Turns Into a Payout, Fast

Automattic is now deciding whether to pay $8.15 million or challenge the deals in court. That decision exists because its own agreements never clearly blocked officers from approving each other’s terms. The gap did not need to last long. It lasted 33 hours.

Common Founder Mistakes

• Leaving Severance Approval Authority Undefined. Founders assume “the board handles comp” without writing it down. Once a leadership gap hits, that assumption is exactly what gets tested first.
• Writing Loose “Cause” Language. Some founders skip a real notice-and-cure structure to keep the agreement short. That hands the executive leverage in exactly the moment control is contested.
• Allowing Officers to Approve Each Other’s Compensation. Founders rarely picture their CFO and general counsel signing each other’s exit packages. Without an explicit bar on it, nothing stops it.

10-Minute Self-Check

Before your next executive hire or amendment goes out, you work through this list:

• Does your board or comp committee hold sole authority to approve or amend executive severance terms?
• Are officers explicitly barred from approving or countersigning each other’s compensation agreements?
• Does “cause” in your executive contracts require real board approval, not just a unilateral decision?
• Is there a written protocol for who can act, and what they can approve, during a board or leadership dispute?
• Does your D&O coverage address disputes over the validity of executive severance?
• Do your board and investors know exactly what your top executives are owed if terminated tomorrow?

If you cannot answer yes to most of these, a leadership gap is all it takes for an executive severance package to become a multimillion-dollar surprise.

Bottom Line

A severance agreement is only as solid as the approval process behind it. When that process is unclear, a short window of chaos is enough for two executives to obligate your company for millions. The fix is deciding, in advance, who has the authority to say yes.

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