Amid speculation all week, the next shoe dropped finally yesterday, as Oracle's arrogant Larry Ellison announced that Mark Hurd would become the new co-President of Oracle, replacing beleagured married Chuck Phillips (whose jilted girl friend put a saucy Times Square billboard up in January). HP wasted no time in filing for an injunction to prevent it, filing in Santa Clara County court at 11:30am this morning, citing a clear violation of their mutual contract and a damaging competitive unfair practices situation. These are tough things to win in California, since judges have viewed them as 'limiting a person's ability to hold a job'. But this one is about as high-profile as you can get; if it is unwinnable, it could well launch a whole new level of pirating key execs.
HP's claims, that Hurd four times in the past three years has signed confidentiality documents, including the finale on August 6, 2010, seem clear enough. HP further noted that he was WELL COMPENSATED in the resignation, partially in order to ensure the confidentiality clause. Well, it would seem that $42 million should have tided him (and any payments to women) over for more than thirty days. But maybe his $7.15 million Atherton home is a bit chilly these days, and he has to husband his cash.... And doubtless, the mere two years that he is supposed to be enjoined might seem longish if you're used to having $20 or $30 million in spending money each year. Poor man.... has to find employment somehow, especially at his advancing age
My take is that this may be the straw that breaks the camel's back. This is an incredibly confrontive act on the part of Ellison and Hurd, a pair who could find even closer friendship in the days ahead since they obviously share core ethical disregard for ordinary laws and rules. It figures -- one of Larry's previous tennis partners and erstwhile competitors in databases went to jail for kiting Informix financials a few years back, a mere 'billion dollar misstatement' for a company whose annual revenues were about that same size. Were it not for cases like Enron and the amazing theft via stock option backdating, "a mere billion" could have raised hackles. We still, of course, don't know the extent of the infractions that led to HP and Hurd separating...
Think about it this way -- seven hand-selected Hurd lieutenants and three others vote UNANIMOUSLY to ask for his resignation -- at a time the world viewed Hurd as "the" HP shareholder savior. They KNEW this would not play well on Wall Street, but they voted their conscience. Doesn't it stretch all credulity to think that the Board was concerned enough about non-sexual non harassment and supposedly $1,000 or maybe a little more in faked expense reports to fire this guy? I give you example A -- yesterday's announcement was as deceitful as the way he managed at NCR and at HP for the past decade. He is dishonorable, unethical, a total fraud and cheat, and he just got exposed more clearly. Plus, as I noted before, he's still a thug.
5 comments:
I enjoy this blog, which has helped me immensely in following the Hurd story. Have to disagree on the legality/ethics of the non-compete. California has a simple code provision which bars noncompetes except in limited situations (e.g., in certain cases where an employee is an owner who sells his/her interest in the business). Recently, the California Supreme Court (Edwards v. Arthur Andersen, LLC) indicated that the code provision means what it says - no noncompetes except in limited circumstances. The court noted that basically the decision did not mean a company cannot protect its trade secrets. Lawyers, trying to be clever, began to try end-runs around the California Supreme Court decision by including clauses that not only said you cannot use or disclose our trade secrets, but also stated that the only way to protect our trade secrets is to prohibit you from entering into employment with competitors for a designated period. In light of the Andersen opinion and the Business and Professions Code provision barring noncompetes, it defies imagination to think that the California Supreme Court would uphold such clauses which attempt to end run the statute. Yes, the courts would enforce a prohibition on using/disclosing trade secrets if there is evidence that trade secrets have been used/disclosed, but it is highly unlikely the California courts would bar employment or allow damages based upon the mere employment with a competitor in such circumstances. Frankly, a good argument can be made that it is the companies which include such a clause in an agreement with an employee, knowing full well that the clause is almost certainly prohibited under California law, are the ones that are being unethical.
Oh we over at FUMH love reading your posts. You are 100% right - in fact you didn't state it strongly enough. His personal hand-picked-and-brought-from-NCR Lawyer, who he had promoted to Executive Vice President and Legal Counsel, Michael Holston was the one who came down hardest on him. Holston, who is (or presumably was) Mark's very good friend said this, “The board concluded Mark's conduct demonstrated a profound lack of judgment." Ouch!
Dean, your points are well made. I agree. The courts would have to do a major reversal to stop this.
My point was simply that if the Board had any reason to think that Hurd was honorable, and that is why they gave him the $42 million sweetheart deal, they've now got a great way to rethink who this guy really was.
When I said this might be the straw that broke the camel's back, I was referring to a hope I still nurture that they'll be more forthcoming about why they really shot this guy. It is a very sad story, from the innuendo that has come my way. The Board did the right thing to get rid of him, but they sure mucked up how they did it and how they explained it
Holston was in fact a key 'switch' player in this scenario. He was the hatchet guy brought in by Hurd to consolidate power and get rid of Pattie Dunn, according to Anthony Bianco's fine account (which had been substantiated several ways for us in our book preparation, but we couldn't get permission to publish from them, so we lightly treated it. See for example page 4 we wrote "unable to explain his own actions..."). What we wanted to write came from folk on and near the Board Ethics committee, curled our hair at the time... Ah, well, Bianco got it from the documents, not the folk...
I have no idea why Holston decided to switch allegiance. We do know from history that lieutenants plot overthrows when they think the king has abused things. Some win, some die. Some do both. Caesar and the Ides of March, "et tu"
I had mixed feelings when I heard the news that Hurd had joined Oracle. I was happy that an HP competitor would be destroyed once Hurd had a chance to systematically dismantle the workforce and R&D. On the other hand, I was sad that my friends working at Oracle would be subjected to a reign of terror.
I am not worried at all that Hurd has any confidential information that would harm HP. He only knows how to cut costs for his own short term gain. The survivors at HP are now left to undo the damage done by the Mark Hurd era and rebuild HP into the great company that it once was.
Post a Comment