Mark Hurd and HP settled their lawsuit yesterday. Hurd will return restricted stock to HP (worth approximately $13.6 million) and continue to work for Oracle. What can we learn from the Hurd/HP affair?
- HP’s suit against Hurd was fraught with legal questions. Chiefly, was the Hurd non-compete enforceable under California law? Nevertheless HP could not wait to file suit and needed some type of resolution. Was this perhaps a message for future employees or executives? Bottom line, it could not sit on its hands and do nothing.
- Mark Hurd bought his way out of his non-compete. As we have discussed here before, employees considering a move can always negotiate with their employer to provide some type of consideration – $13 million in stock options - to get out of the non-compete. Hurd’s compensation package from Oracle probably makes up for this loss so don't' feel too sorry for him.
- The fact that HP did not immediately seek a temporary restraining order to prevent Hurd from working for Oracle probably indicated that HP was concerned about the strength of its case. If I had to guess, I would assume the lawyers were concerned that they could not meet their burden under California law, which does not look favorably upon non-competes.
- Hurd could have sued first and sought to declare the non-compete unenforceable. Instead he chose to wait. It appears he played it right. There was no TRO that prevented him from working. Yes, Hurd had to give up restricted stock but some payment was probably in his calculus to make the move to Oracle. It would be interesting to know if Oracle indemnified Hurd for the lawsuit brought by HP and will end up paying him for the stock he gave up anyway.
Well played Mr. Hurd. From HP's perspective, at least it got its stock back.