Former chief executive of Hewlett-Packard Co., Mark Hurd, was recently hired by Oracle Corp as a senior executive. HP has initiated a lawsuit against Hurd claiming that his transfer to Oracle violates the terms of his exit agreement. Hurd's transfer could potentially leak valuable trade secrets to a competitor which would compromise the future of HP. This suspected violation of an exit agreement brings into question Mr. Hurd's ethics as he transfers to a rival company.
The purpose of an exit agreement is to provide for a secure and stable departure from a company. The goal is to have both the company and the departing member benefit mutually from leaving the company. Hurd's departure was based upon sexual harassment allegations, which were found to be unfounded upon investigation, and a violated code of business conduct in which Hurd provided inaccurate expense reports that concealed a personal relationship with a former contractor. With Hurd's exit, he received an exit package worth approximately $35 million. HP attempted to secure the company's trade secrets by preventing a transfer to a rival company via the exit agreement. The lawsuit is complicated though due to a lack of a noncompete clause within Hurd's exit agreement.
HP has shown its commitment to the lawsuit and its ethics policy by hiring Allen Ruby, a San Jose, California based attorney that is notorious for dealing with high-profile clients. This has sent a message that HP is serious about fighting this case. The lawsuit could affect future lawsuits regarding the same matter. Courts generally implement a concept called stare decisis when making decisions. Stare decisis the legal principle that states that judges are obligated to respect precedents set by prior decisions. California courts have been known to support employers that transfer and the lawsuit will be an uphill battle for HP. Hypothetically, if HP wins and the California state court breaks stare decisis, the lawsuit could affect future corporate lawsuits.
While the outcome of the lawsuit may take months to decide, examining both companies' ethic statements makes it unclear whether or not Hurd has made an ethical violation. HP's standards for business conduct have sections that explain how HP protects sensitive information, does not trade or disclose non-public material information, and obtains business intelligence appropriately. If Hurd feels ethically tied to HP's code of business conduct, he may have violated business ethics. This also may not be true due to his exit agreement functionally severing his ties with HP. Additionally, HP would not be obtaining information with Hurd's absence, Oracle would. While Oracle's ethic statement is not as clear cut, an important section of their business conduct is the importance of not influencing others. Using a position to coerce or provide information is not ethical under Oracle's business conduct statement.
The ethics of this transfer will inevitably be sorted through the legal system, but this issue plays a larger role in business. The transfer of high-ranking executives between companies could decimate a company's ability to remain competitive within a market as their trade secrets would be lost with the departure of an executive. Oracle is guaranteed to use Hurd's business talent to promote their company. Whether or not this will have an adverse effect on HP is not apparent yet.
Article:
http://online.wsj.com/article/SB10001424052748704358904575477870066918884.html?mod=WSJ_Tech_LEFTTopNews
Business Conduct Statements:
-HP: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTg4NjN8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
-Oracle: http://www.oracle.com/corporate/community/governance/cebc.pdf
No comments:
Post a Comment