A few weeks after filing a non-compete lawsuit with Mark Hurd, HP has settled with the former CEO for an undisclosed amount. InformationWeek has more on the surprisingly fast resolution of the lawsuit:
…one possibility is that Oracle will pick up the tab for at least part of Hurd’s lucrative settlement package with HP. Hurd was set to walk away with at least $40 million from his former employer. At Oracle, he’s is in line for an annual base salary of $950,000 and a bonus of $10 million in the current fiscal year.
Oracle CEO Larry Ellison also affirmed his commitment to the alliance. “Oracle and HP will continue to build and expand a partnership that has already lasted for over 25 years,” said Ellison, also in a statement. The rapprochement between the two tech giants is in stark contrast to the barbs they exchanged shortly after HP announced Sept. 7 it was suing its former chief.
HP and Oracle have been working together on a number of fronts for several years. Among other things, the companies maintain a joint technology center where Oracle database software is optimized for performance on HP-UX servers, and HP says it’s the leading Oracle applications infrastructure partner.
According to the Wall St. Journal,
…in a regulatory filing Monday, H-P said Hurd had agreed to give back about 345,000 restricted H-P shares that he had been given as part of his exit package, which also included $12.2 million in cash. Those shares were worth $13.6 million….Oracle initiated the talks. Ellison called Marc Andreessen, a member of H-P’s board, soon after the suit was filed.
This wasn’t the first time a company has settled over a CEO going to a competitor, writes the SF Chronicle:
In a similar case in 2005, Motorola Inc. sued to block former president and chief operating officer Mike Zafirovski from joining Nortel Networks Corp. as chief executive. The suit was settled when Zafirovski agreed to repay Motorola $11.5 million, although Nortel reportedly agreed to reimburse Zafirovski.
Another Chron article analyzes why the settlement might have taken place:
Previous legal precedents made it unlikely that HP could have prevailed in the case, but Oracle probably realized the lawsuit could have distracted Hurd for months, said New York employment lawyer Stephen Kramarsky.
“I don’t see this as a big win or a big loss for either side,” Kramarsky said. “It was probably more about realizing that these two companies have a very important business relationship, so what’s $14 million among friends?”
By insisting that Hurd surrender some of his severance package, HP was able to polish its reputation with shareholders who have suffered a combined $19 billion hit to the value of their stock since Hurd’s ouster.
I guess $30 million isn’t that much to Hurd, either. Wonder who HP will hire as their next ill-fated CEO.