Founder of Automattic Matt Mullenweg will pay staff who don’t support his ongoing legal battle with WP Engine $30,000 or six months’ salary – whichever is higher – to leave the company.
The CEO who co-founded content management software WordPress in 2003 is embroiled in an ongoing legal saga with WP Engine, a major WordPress hosting provider.
In a blog post, Mullenweg confirmed he gave staff an “Alignment Offer” to resign before 8 pm UTC on October 3 if they disagreed with his battle.
Mullenweg revealed 159 employees took the offer, around 8.4% of the company. “The other 91.6% gave up $126M of potential severance to stay!” he wrote.
Staff who took the exit offer lost access to Automattic later that evening and were informed they would not be able to return as a ‘boomerang’ or ‘re-hire’ employee.
The CEO added that HR “added some extra details to sweeten the deal” and make it as enticing as possible, but did not clarify further.
Why did Automattic CEO give employees an ultimatum?
WordPress is a leading content management system that powers around 40% of all websites, co-founded by Mullenweg in 2003.
Automattic runs WordPress.com – which is open source and therefore free for any user to download and install – and its commercial arm, which include paid-for services such as security, customer support, and advertising products.
WP Engine, a managed WordPress hosting service, is majority-owned by private equity company Silver Lake Technology Management.
Mullenweg accuses WP Engine of years of trademark violations. On September 23, his attorneys sent a cease-and-desist letter to the company detailing alleged infringements including the description of its services as bringing “WordPress to the masses.”
The dispute has spilled into a public legal battle, with WP Engine filing a lawsuit against Automattic and Mullenweg, accusing them of extortion.
As the feud escalates, Mullenweg said some of his employees exhibited signs that they did not agree with his actions.
“It became clear a good chunk of my Automattic colleagues disagreed with me and our actions,” he wrote.
The embattled CEO said that Automattic wanted to design “the most generous buy-out package possible.”
According to the blog post, 63.5% of those who took the buy-out offer were male, while 53% were US-based. 79.2% came from the company’s Ecosystem business.
Of the 159 who resigned, 18 earned over $200,000 per year, and one employee took the offer having started just two days before the ultimatum.
The company’s leadership team was affective, with Executive Director Josepha Helen Chomphosy among those to confirm their departure.
‘Alignment Offer’ gives CEO “emotional roller coaster of a week”
Mullenweg described the week of the ultimatum as an “emotional roller coaster,” but added he now feels “much lighter.”
“I’m grateful and thankful for all the people who took the offer, and even more excited to work with those who turned down $126M to stay,” he added.
The ultimatum, despite HR’s best efforts to make it as generous as possible, undoubtedly made last week challenging for Automattic’s employees.
The post revealed four employees took the buy-out offer before changing their minds.
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Buy-outs have a reputation for damaging the morale of employees who remain in the company after the deadline.
They can also present headaches further down the line for employers if not executed properly.
Earlier in September, X lost a legal battle over unpaid severance to a former employee who left the company in 2022 following Elon Musk’s takeover of the social media platform.
Musk emailed employees revealing his new vision for the company’s future, which he called "Twitter 2.0,” with workers offered the choice to commit to his new vision or leave the company with three months’ severance.
But former employees, including Twitter's former Head of Total Rewards, have claimed that thousands of employees were not given the full severance pay to which they were entitled.