Hewlett-Packard Co.'s settlement with CEO Mark Hurd clears the way for him to lead Oracle Corp. with an agreement to push the present firm’s business with his former employer.
The deal announced on Monday will cost Hurd $14 million in stock that was part of his HP severance package. But that’s not making a grand impact as he's already profited from his forced exit from HP, and is expecting to make millions of dollars more than he's giving up.
The truce ends two weeks of uncertainty over whether HP would drag out its lawsuit against Hurd.
The deal lets HP save face over the way it has been handling Hurd's exit. It also removed the pain of a long court battle over whether Hurd, with his knowledge about the trade secrets of HP, could be barred from working at Oracle as a co-president. The courtly event over Hurd, however, exposes how the long-time professional deal between HP and Oracle has cooled.
Both the companies have collaborated for decades to make sure HP's hardware worked smoothly with Oracle's software, amassing 140,000 joint customers. But Oracle is now standing as a tough competitor for HP in computer servers with Oracle’s $7.3 billion acquisition of Sun Microsystems.
HP's board pressured Hurd to resign in August and after the turf that emerged between the two companies over Oracle hiring Hurd, Ellison called HP director Marc Andreessen to start negotiating a settlement of the Hurd lawsuit.
Previous legal precedents made it unlikely that HP could have prevailed in the case, but Oracle probably realized that 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 surrenders some of his severance package, HP was able to gain back its reputation among the shareholders who have suffered a combined $19 billion hit to the value of their stock since Hurd's exit.
Hurd got a $12.2 million payout as part of his severance, and filed papers last month to sell about $30 million worth of stock that he got by exercising options that came with the package. The settlement requires him to give up shares of restricted HP stock worth nearly $14 million, based on Monday's closing price of $39.39.
After the settlement was announced, both Oracle and HP said in a statement that Hurd would be able to do his job at Oracle while protecting HP's confidential information.
While HP's stock price has gone down since Hurd's departure, Oracle's share has leaped its way with hiring Hurd on board.
Earlier on Monday, Hurd made his first public appearance as an Oracle employee, by presenting a new data-storage computer at the company's annual conference in San Francisco. The computer Hurd unveiled is part of Oracle's line of Exadata database and storage machines, key components in Oracle's push to steal business from HP and IBM Corp.
