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HP Is Right To Sue Mark Hurd
By Dian L. Chu, Economic Forecasts & Opinions
Hewlett-Packard Co. slapped Mark Hurd, the CEO it ousted last month, with a law suit soon after rival Oracle Corp. named Hurd as Co-president and Director. HP claims that Hurd cannot perform his job at Oracle without violating a confidentiality agreement.
Upon his exit of HP, Hurd signed a confidentiality pact protecting HP`s trade secrets and confidential information with a time frame of 24 months, as part of a condition of receiving a golden parachute pay package worth more than $33 million. So, his latest action seems indeed in violation of said agreements. As such, HP is right to bring suit against Hurd and he should not be allowed to join Oracle as a result.
Some argued that without a non-compete provision, which is generally unacceptable in California, HP should expect Hurd to work for another tech company since his experience resides mainly in the technology sector. Otherwise, where else would he work? This argument is flawed for the following reasons:
- CEO`s get paid handsomely for this very reason, they are set for life, at the very least. So, if they are restrained from not working for a direct competitor for two years after leaving the firm--sitting on $33+ million dollars, in Hurd's case--so be it.
- Mark Hurd also has many options. He may choose to work in the technology sector with a company that do not pose this strong a conflict of interest with HP. HP most likely would not object to companies such as some smaller tech firm, private equity, or venture capital, just to name just a few of the many options available within technology.
- Moreover, many exiled CEO`s work as business consultants, advisors, teach classes at MBA programs, work for many diverse business organizations, etc. during this natural transition period.
One thing HP does expect with Hurd’s signed agreement is that he will not be working for a direct competitor, at a sensitive position just one month later, especially at a company the size of Oracle where his presence, fresh knowledge of HP`s business strategy and corporate accounts could potentially be used against HP.
This is the exact purpose of the confidentiality agreement to protect HP`s trade secrets from direct major competitors. Furthermore, Mark Hurd was handsomely compensated for giving up some of his rights and future employment options under the agreements upon leaving HP.
Actually; Mark Hurd was being compensated for this eventual day during his entire tenure at HP. Sometimes CEO tenures are brief, sometimes the high profile nature of their job with an intense spotlight on any failures and successes limits future employment options, for this very reason there is a “last major job premium” paid to CEO`s at large corporations.
There’s reason that you hear this all the time--make sure you read anything very carefully before you sign-- especially something as important as an exit agreement. Mark Hurd knew full well when he signed the pact, that he couldn`t go take the top job at as company such as Oracle one month later without violating at the very least the spirit and intent of the confidentiality agreement, that much is obvious.
Mark Hurd chose to sign the agreement in the first place, where he had the choice of not signing it. My guess is that this was money dependent, and as a result, he should have to live with the consequences.
I, for one, wouldn`t have a problem with the California court upholding the confidentiality agreement, as every action has its consequence(s), and Mark Hurd should not be an exception. This case no doubt is stiring up debates within the legal community, and I guess we will just have to wait for the courts to decide the validity of the exit agreement and its ramifications.
Dian L. Chu, Sep. 7, 2010
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It's pure and simple. There is no non-compete. If a judge upholds HP's claim, then it would hold for absolutely all professionals. At almost all levels, we all handle "trade secrets" (which usually are not that secret, but companies like to pretend). We could all be banned from working in our industries.
This is precisely why non-competes are without validity in most jurisdictions.
PS: HP was immensely stupid to fire Hurd and stupidity is an expensive hobby.
HP can sue if it wants....But the courts generally don't uphold non-compete contracts....The arguement is, you can't stop someone from making a living....And really, computers have been around for what, 60 years? Can there really be anymore trade secrets left out there?
BTW, Oracle is a loose cannon, LE will not sell, I think he has 38% controlling interest at Oracle, but I bet IBM is getting tired of his act, they should buy HP just to once and for all crush LE, and shut this guy up, for once put him in his place --he knows you have to wait 24 months to poach a competitor`s ex-CEO due to confidential information.
Great take Dian, as ussual you think outside the box.
Lawsuit? Against Mark Hurd? Ridiculous.
He was the best thing to happen to HP in the last five years.
This whole thing has been cooked up to deflect attention from the shareholder lawsuits against the Board for causing the loss of almost $1B of HP shareholder value by their whimsical and arbitrary handling of the whole Mark Hurd affair.
So he had a taste for MILF honeys? If I were on the Board and cognizant of the results Mark Hurd was bringing in, I would have personally ensured that he had an endless supply of (ahem) "contractors" to keep him happy.
Besides, if I'm one of those feckless idiots on the HP board I would think more than twice before I took on Larry Ellison and Oracle. It would be just like Larry to give HP their $33 million back (he could do it out of petty cash), immediately give Mark Hurd another 33 million as a "signing bonus" (if he hasn't already), and then immediately launch a hostile bid for HP due to its now "attractive takeover" price.
This story ain't over yet....
Agreed. It's not about the money for Hurd or Ellison. It is about winning and honor. Even if the law said Hurd can not work for Oracle. These guys are now friends with an eye on making HP pay. Your lawyers can't protect you now HP!
OK Hurd crossed over the line with his personal/professional life and should have gotten a slap on the wrist. But the board should look at the big picture impact of his tenure to decide whether he stays or goes.
I don't know. HP - Oracle. Oracle - HP. Where is the industry NOT incestuous anymore? This is geek pretend and extend.
Plus, we're talking Larry E. here. Like he gives a shit.
Larry and Mark are perfect together....They can take turns stuffing $10s down the G strings of the dancers.
HPQ was going to make an offer for ORCL and Hurd knows the specifics.
$33 million? That will be chump change by the time Ben gets through with it.
HP wants to have its cake and eat it too. Ludicrous. It is the HP board members who should be sued by shareholders for breach of fiduciary duty in firing Mark Hurd. Running to the law won't cure their foolishness.
agreed, though hurd seems like a douche, hp's board seem like much bigger douches, they could have handled this differently if he was doing his job for the most part. I just want it to get the phuck off the news and i could care less.