Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

HP Is Right To Sue Mark Hurd

Companies / Corporate News Sep 09, 2010 - 01:55 AM GMT

By: Dian_L_Chu


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. H 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.

Disclosure: No Positions

Dian L. Chu, M.B.A., C.P.M. and Chartered Economist, is a market analyst and financial writer regularly contributing to Seeking Alpha, Zero Hedge, and other major investment websites. Ms. Chu has been syndicated to Reuters, USA Today, NPR, and BusinessWeek. She blogs at Economic Forecasts & Opinions.

© 2010 Copyright Dian L. Chu - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in