HP seeks an injunctionagainst former chief executive Mark Hurd to prevent him
joining the board of Oracle as co-president.
Defenestrated last month after claims involving mishandled expenses, Mr Hurd
no doubt has little love for his previous employer. But his severance
package was worth tens of millions of dollars. What exactly were
shareholders paying for?
Trade secrets
As HP rightly asserts in the complaint, it is inconceivable that Mr Hurd could
do his Oracle job without “disclosing or utilising HP’s trade secrets and
intellectual property”. The companies compete to sell businesses hardware
and services, making inside knowledge of a rival’s strengths and weaknesses
invaluable.
Even if it is less blatant than chasing a customer relationship known to be
fraying, simply discouraging research and development in an area known to be
unproductive would convey an advantage. Note that Oracle’s market
capitalisation jumped by $7bn on news of the appointment.
Employment mobility
California law favours employment mobility, meaning HP is unlikely to prevail
in court. So the several non-disclosure agreements signed by Mr Hurd seem
redundant. Sure, contracts need to contain some sort of penalty to protect
against questionable dismissals but how do you stop knowledge moving to a
new employer?
Still, HP’s shareholders might reasonably expect that having paid Mr Hurd $98m
between 2007 and 2009, and then a large severance sum, the fiduciary duty to
protect their interests might extend beyond the company carpark.
Perhaps it is an ethical question for Mr Hurd to answer to his own
satisfaction. But shareholders, and the boards that are supposed to
represent them, should ponder what level of loyalty they can realistically
buy.
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