Hewlett-Packard (HPQ) is suing its former chief executive, Mark Hurd, after news that he will be taking the post of co-president at competitor Oracle (ORCL). The world's largest maker of personal computers and printers alleges that Hurd could end up violating confidentiality agreements by accepting the position.
HP, which filed the claim in a California Superior Court in Santa Clara County on Tuesday, says its lawsuit is part of an effort to protect its trade secrets and to enforce agreements that Hurd signed last month as part of his severance package. The severance package included a payment of $12.2 million, plus stock options and additional benefits that may increase the total value of the package to more than $40 million, according to the Associated Press.
"Hurd's position as president and member of the board of directors for Oracle puts HP's trade secrets and confidential information in jeopardy," HP states in its claim. "As a competitor of HP, he will necessarily call upon HP's trade secrets and confidential information in performing his job duties for Oracle."
Meanwhile, Oracle released a statement Wednesday calling the lawsuit "vindictive" and effectively threatening to end its relationship with HP.
"Oracle has long viewed HP as an important partner," Oracle chief Larry Ellison said in the statement. "By filing this vindictive lawsuit against Oracle and Mark Hurd, the HP board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees. The HP Board is making it virtually impossible for Oracle and HP to continue to cooperate and work together in the IT marketplace."
Lawsuit Likely Won't Keep Hurd Away
The lawsuit highlights Oracle's relatively recent entrance into the server market, as well as the controversy surrounding Hurd's departure from HP after five years on the job. Long known as a database and software leader, Oracle acquired Sun Microsystems for about $7.4 billion earlier this year, making it a competitor to both HP and IBM (IBM).
The claim also continues the controversy surrounding Hurd's departure from HP last month. He resigned after being accused of sexual harassment by a contractor -- and after a resulting investigation found that he'd made unauthorized payments to the contractor. Subsequently, News Corp. (NWS) said in a Securities and Exchange Commission filing that Hurd would not be re-nominated for its board of directors and would step down after the company's Oct. 15 annual meeting, although it didn't specify why.
Still, the lawsuit is unlikely to prevent Hurd from working for Ellison, who previously wrote a letter blasting the HP board for its decision to force Hurd to resign.
Ellison may end up being forced to keep Hurd from getting involved in anything related to Oracle's server operations for a year or so, says Jon Holman, founder of San Francisco-based executive-recruiting firm the Holman Group. But Hurd's track record at HP -- the company's stock has surged 45% in the past five years -- keeps him in demand. "Very few people, if they needed a high-quality CEO for a big technology company, would say 'we wouldn't consider Mark Hurd,'" Holman says.
Oracle announced Monday that it had hired Hurd as president and named him to the company's board of directors. "Mark did a brilliant job at HP and I expect he'll do even better at Oracle," Ellison said in a statement Monday.