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Oracle and Hurd Play Hardball

September 8, 2010

Once upon a time, there was a publicly-traded company that fired its CEO because he lied. According to the company’s internal investigation, he falsified documents, all in an effort to hide what he may have been doing with a female contractor to the company.

But don’t worry! That CEO received a golden parachute said to be worth as much as $35 million for his troubles. This is at the same time that his company’s employees were expected to cut back, lay off their co-workers, and pull double duty in the worst recession since the Great Depression.

It must have been one interesting relationship with that contractor.

And then, the CEO – Mark Hurd, formerly of HP – gets hired by his former company’s former friend and emerging rival: Oracle. It was as if Mr. Hurd decided to climb the mountaintop of Wall Street’s skyscrapers and proclaim for the world to hear, “Let the lawsuits begin!”

Hurd signed a confidentiality agreement – a contract, I should note – that protects HP’s trade secrets and proprietary information. The agreement was to stand for twenty-four months.

It didn’t last one.

On Monday, Oracle announced its hire of Mark Hurd in a co-president role. Yesterday, HP predictably sued Oracle, citing Hurd’s confidentiality agreement and the inherent conflict of interest in bringing HP’s game plan to one of its burgeoning competitors.

What I find most shocking about this saga, other than the fact that it sounds like a disagreement between fraternities fighting over an injured quarterback, is that Oracle is not only brazen, but trash-talking its way into the courtroom.

According to several news reports, Oracle’s CEO Larry Ellison called HP’s decision to oust Hurd the “worst personnel decision since the idiots at Apple fired Steve Jobs.”

While I believe the reports that Hurd is a brilliant businessman, the actions of HP’s Board of Directors establish doubts about his attention to detail. If the allegations are true, HP’s decision might point to larger issues.

What is known is that Hurd signed a confidentiality agreement upon his departure, with a generous severance payment. Hurd gained a $35 million license to do anything post-HP. He could have started a new businesses, retired to the beaches of Bermuda, or run a charity for two years. But instead, he rejoined the ranks of corporate America, at his former employer’s competitor.

Oracle’s lack of concern for the agreement offers a clear omen: it will be playing hardball. And Oracle’s actions indicate it will try to win, even if it risks paying for this move in the courtroom.

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