Thread

Automattic has a new board after failed attempt to put CEO on leave

148 points · 194 comments · ilamont

flerchin · 1790439254 · focus · HN ↗
It says he has 84% of the voting shares. Is there any possible way that the board could have been successful? Regardless of Mullenberg, (and I know he's controversial) a coup that is pre-ordained to fail seems like value destroying negligence.
1. jordanb · 1790439445 · focus · HN ↗
  They could have known they wouldn't succeed but they could have decided their fiduciary duty requires them to either try or resign.
  1. hoten · 1790439645 · focus · HN ↗
    Didn't they craft themselves a nice golden parachute if fired? Then proceeded to kick off events that would guarantee their dismissal?
    That's less fiduciary duty and more hacking a payday.
    collingreen · 1790440628 · focus · HN ↗
    Getting out of a toxic job while failing up. Business can be strange sometimes.
    throw0101a · 1790441061 · focus · HN ↗
    > That's less fiduciary duty and more hacking a payday.
    A large golden parachute for firing a board member could be a disincentive mechanism to do it: a 'poison pill' of a kind.
    * <a href="https://en.wikipedia.org/wiki/Shareholder_rights_plan" rel="nofollow">https://en.wikipedia.org/wiki/Shareholder_rights_plan
    They could have felt they were doing the right thing, and making a public statement of the situation, but knew it was a bit of a kamikaze tactic and so made it more painful for when the eventual backlash occurs.
    fwipsy · 1790442645 · focus · HN ↗
    Regardless of intent, if true (haven't verified myself) it seems like a hell of a perverse incentive.
    throw0101a · 1790454275 · focus · HN ↗
    IMHO so it tying CEO pay to stock price. Unless the options/cash-out is delayed for 5+ years after they leave the position, they can 'juke the stats' in the short-term while leaving the company in a bad place long-term (obligatory Boeing-being-run-by-MBAs reference).
    awb · 1790457820 · focus · HN ↗
    If it was a poison pill then why make the severance $8M instead of the majority (or all) of the value of the company?
  2. doikor · 1790439729 · focus · HN ↗
    Yeah the minority share holders can’t sue them for not trying to do their job even if it lead to them getting fired. (They could have quit too)
    If they truly believe the CEO was destroying the company/its value.
  3. flerchin · 1790525473 · focus · HN ↗
    Yeah if they know they can't succeed, then imo they have a fiduciary duty to not try. Which only leaves resigning.
2. toast0 · 1790443343 · focus · HN ↗
  Deleware law [1] says
  > Special meetings of the stockholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws.
  California law specifically allows for a meeting called by stockholders with 10% of the vote, but for Deleware, a large holder would need authorization in the bylaws. If there was no such provision, a board could plausibly control the company until the next annual meeting, or until court action. Annual meetings can be delayed a bit, but any stockholder can force one once they're a little late.
  If you were concerned about the judgement of the CEO/majority holder, and you were optimistic that it was a temporary issue, it might make sense to remove said person for as long as possible; be it a few months or a day and a half.
  [1] <a href="https://law.justia.com/codes/delaware/title-8/chapter-1/subchapter-vii/section-211/" rel="nofollow">https://law.justia.com/codes/delaware/title-8/chapter-1/subc...
  1. WJW · 1790456384 · focus · HN ↗
    Why would they assume it's a temporary issue though? There's been drama around wordpress for years now, and almost all of it has been around the CEO.
    jeltz · 1790459624 · focus · HN ↗
    Yeah, that is the main thing which makes to board look bad. Mulleweg has always been a problem and will not stop being so. They should have resigned.

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