Thread

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

148 points · 194 comments · ilamont

betteryet · 1790454725 · focus · HN ↗
How did the board plan pull this off if Mullenweg has 84% of the voting shares? For that matter, what is even the purpose of a board in a multi-class share structure with the founder holding above 50% voting shares.
1. ValentineC · 1790457054 · focus · HN ↗
  > For that matter, what is even the purpose of a board in a multi-class share structure with the founder holding above 50% voting shares.
  I guess it was mostly advisory, with the added purpose of making it seem like the various organisations were stewarded by members of the community that were not Matt Mullenweg.
2. almostroot · 1790458179 · focus · HN ↗
  They expected this to fail, they gave themselves golden parachutes: <a href="https://techcrunch.com/2026/09/16/automattics-interim-ceo-and-legal-chief-signed-reciprocal-severance-deals-during-mullenwegs-brief-ouster/" rel="nofollow">https://techcrunch.com/2026/09/16/automattics-interim-ceo-an...
  1. ValentineC · 1790458493 · focus · HN ↗
    Don't confuse the board members with other members of their C-suite.
    almostroot · 1790465880 · focus · HN ↗
    You're right, it doesn't seem like the board was involved in the golden parachute. Hard to imagine they tried this out of the goods of their hearts but I cannot find anything concrete to say otherwise
3. bradleyjg · 1790459110 · focus · HN ↗
  > what is even the purpose of a board in a
  Delaware law requires a board.
  Whether limited liability should actually be allowed at all in such a situation is a better question.
4. robocat · 1790459160 · focus · HN ↗
  Just looking at shares is over simplistic.
  You can't know what other conditions Mullenweg signed in contracts such as shareholders agreements etc.
  Typically if you take VC money, the VCs will require the ability to sack the founder and take control, perhaps if particular targets are not met.
  I've seen it: an ambitious owner agreed to stretch goals, and the VCs took took over the company from the founder after they had predictably failed to meet the goals.
  1. moralestapia · 1790459884 · focus · HN ↗
    Back to reality. Read TFA again.
    FreakLegion · 1790466327 · focus · HN ↗
    robocat was answering a general question about the relationship between ownership and control. And they're right that representing 84% of the voting shares doesn't mean anything. It's standard for major investors to have their board seats guaranteed, plus veto rights over things like creating new stock and selling the company. (It's not standard to have "the ability to sack the founder and take control", though.)
    Founders are almost always outnumbered on the board by Series B, but like I speculated in <a href="https://news.ycombinator.com/item?id=49638676">https://news.ycombinator.com/item?id=49638676, Automattic is unusual here, and Mullenweg may control it. There's still a decent chance that True Ventures left in protest rather than being booted, though, and has the right to a seat[1]. It's just, what's the point if Mullenweg has them beat 4-1?
    1. Edit: The article confirms that Toni Schneider resigned, but not whether True Ventures (his firm) has the right to a seat.
    robocat · 1790470153 · focus · HN ↗
    Thank you for correcting me. I'm in an armchair but I did find this good article on the topic:
    <a href="https://ilyastrebulaev.substack.com/p/who-controls-your-startup-why-governance" rel="nofollow">https://ilyastrebulaev.substack.com/p/who-controls-your-star...
    FreakLegion · 1790479096 · focus · HN ↗
    The board can sack the CEO, usually with a simple majority vote. That's just how boards work.
    What's not normal is any kind of special investor right to sack the CEO unilaterally.
    moralestapia · 1790484942 · focus · HN ↗
    You're all arguing as if TFA was about the board overpowering the CEO, whereas if you read (even) the title, the reality is that they couldn't do anything, zilch.
    FreakLegion · 1790486104 · focus · HN ↗
    We're talking about the question that spawned this thread:
    > what is even the purpose of a board in a multi-class share structure with the founder holding above 50% voting shares.
    This is a question about governance in general. The details of what happened at Automattic are irrelevant.
    moralestapia · 1790601610 · focus · HN ↗
    Your answer is in the title of TFA.
    It's nice to imagine things; I was once a kid as well, and imagination is the most powerful force on the planet, no doubt about it. I've been a scientist for 15+ years, so trust me, I know how nice it is to daydream about the "could-be"s and the "possibilities".
    But, unfortunately, reality takes precedence over imagination. It's like these Avengers and Star Wars movies, I'm sure you've enjoyed them. It'd be really, really, really fun if they were real... but they're just... not, you know? On my end, I was fortunate enough to learn this during my teen years. It's good to let your imagination run wild, but always keep a foot in reality. It will save you a lot of trouble.
    I took my time to explain this because it is a topic I have devoted a lot of time to, and I wanted to share it with you with the best intention of improving your life as well. I wish you the best with that, lad :).
    Anyway, back to the topic at hand. The reality is that Matt had all the cards in his hand, and no amount of "argumentation," Hacker News armchairing, good wishes, or "imagination" will ever change that. You could ask the ousted board members if it did! Lmao.
    Of course, one might discuss what would've happened if Matt had lost. If the terms were different, if the board had more power, or as another young fella here was saying, "what if they signed a clause that says they cannot be ousted", I mean, those are all really interesting topics to discuss, don't get me wrong, but it is also equally interesting to talk about other imaginary things here like, "what if we had wings and could fly?" or "what if we didn't need to eat and drink water?" and so on.
    With no intent to diminish the power of imagination, I was respectfully arguing from the point of view of reality.
5. jacquesm · 1790461068 · focus · HN ↗
  Fig leaf and a way to offload some responsibility. I would never ever join a board like that, you're in the hot seat when it goes wrong and yet you have no agency.
6. ncr100 · 1790462002 · focus · HN ↗
  Speculation: performative, seeking to illustrate Mullenweg's gross unsuitability for the organization.
  1. CPLX · 1790462269 · focus · HN ↗
    How does the word "performative" apply to an exercise of the board's one major function? Wouldn't that be the definition of substantive?
    The fact that they were subsequently fired doesn't make it into a performance. It's still a board resolution.
    nobodyandproud · 1790463562 · focus · HN ↗
    With 84% of voting shares by the CEO, the board was setup to fail.
    CPLX · 1790464018 · focus · HN ↗
    I mean, they didn't fail. They were tasked with deciding if the guy was capable of doing the job. They decided that he wasn't and fired him.
    Subsequent to that, they were removed from their positions. Failure is a subjective assertion that implies that they had some idea that they were going to do something different than what they actually did, but that doesn't seem supported by any of the actual facts.
    Seems to me they successfully communicated that their judgment and decision was that he should be fired, and are no longer responsible for the outcome, as they've been removed from their fiduciary duty of making judgments like that.
    nobodyandproud · 1790466490 · focus · HN ↗
    Except, that’s far short of the full responsibilities of the board.
    CPLX · 1790466547 · focus · HN ↗
    What exactly should they have done differently?
    ragall · 1790477949 · focus · HN ↗
    Resign and let minority shareholders sue, in order to have the courts decide that Matt is unfit as CEO. It wasn't the board's authority to decide the CEO was illegally abusing his powers, only courts can decide that.
    CPLX · 1790512282 · focus · HN ↗
    What are you talking about that literally is exactly what the board’s power is. Explicitly.
    ragall · 1790516850 · focus · HN ↗
    It is not. Boards don't have the power to decide on issues of legality, which is the purview of courts.
    CPLX · 1790533815 · focus · HN ↗
    I'm not even sure what you're talking about. I think you're lost.
    Boards have the power to decide any and everything in a corporate structure. They are, in fact, the only way that a decision of the corporation is made and made official.
    I'm not sure what legality has to do with any of this. A corporation is a legal structure, and a board is its decision-making body. If you're talking about criminal charges or disputes between parties about who's got the power or authority to do something, then those are decided by courts, but in a civil context courts don't originate decisions. Courts ratify decisions or choose between dissenting views on what the decision is.
    ragall · 1790588959 · focus · HN ↗
    I'm talking about the fact that this is a special situation, where the majority shareholder is also the CEO. In that case the board cannot effectively fire the CEO because he, as the majority shareholder, also had the power to nullify that. The only way to remove such a CEO is to sue and ask the Court of Chancery of Delaware to have the CEO removed and barred from further appointments as CEO. The board can't do that, as it's outside its authority.
    The members of the board should have recognized the special nature of this situation, and take the only principled course of action possible here: resign and sue to have the CEO removed and barred; instead they let the interim CEO give himself a golden parachute (so much for protecting the shareholders, he was protecting his arse).
    CPLX · 1790605851 · focus · HN ↗
    But why should they have done that instead of what they did which was far simpler and had the effect of communicating their point of view effectively.
    The CEO can't fire the board. The board can fire the CEO.
    The majority of shareholders can fire the board.
    The fact that one person plays the role of two of those actors is interesting but one of the whole points of corporate governance is that everybody plays their actual role when they're in that role and assigned to do that role.
    In that context the board tasked with making a decision on who should be CEO made a defensible decision and then they were fired by the shareholders who disagreed. This is exactly what's supposed to happen. Everything is by the book.
    ragall · 1790610814 · focus · HN ↗
    > The CEO can't fire the board.
    He can when he's the majority shareholder.
    > but one of the whole points of corporate governance is that everybody plays their actual role when they're in that role and assigned to do that role.
    Where do you think you are ? In Victorian England where everyone dutifully plays one's role with a stiff upper lip and never tries to abuse power ?

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