Mark Hurd, the ousted CEO of Hewlett-Packard Co., has settled a lawsuit brought by his former employer that sought to stop him from working at rival Oracle Corp.
Under the terms of the settlement announced Monday after the stock markets closed, Hurd agreed to relinquish stock he was given in his severance package. The shares are worth nearly $14 million, based on Monday's closing price of $39.39.
Hurd, 53, appears confident that he will make far more at Oracle than he would have had he fought HP for the right to keep the remaining stock in his severance package.
Besides a $950,000 salary and a potential cash bonus of $10 million during the next year, Hurd's new contract at Oracle will grant him 10 million stock options for starters. Oracle also may give Hurd another 25 million stock options during the next five years. Those options could be worth tens of millions of dollars, depending on how Oracle's stock fares during the next five years.
HP and Oracle said in a joint statement that Hurd will be able to perform his duties as an Oracle co-president without spilling HP's trade secrets.
Earlier on Monday, Hurd made his public debut as a co-president at Oracle, showing off a new data-storage computer at the company's annual conference.
Hurd was forced out as HP's chief last month in the wake of a sexual harassment investigation. He accepted the post with Oracle in early September, prompting HP's lawsuit.
Oracle CEO Larry Ellison evidently didn't want to risk having Hurd handcuffed by the lawsuit.
After publicly scolding HP's board for its "vindictive" act, Ellison privately called HP director Marc Andreessen to start negotiating a settlement of the Hurd lawsuit, according to a person familiar with the talks. This person wasn't authorized to speak publicly.
Oracle spokeswoman Deborah Hellinger declined to comment on how the settlement came about.
Previous legal precedents made it unlikely that HP could have prevailed in the case, but Oracle probably realized 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 surrender some of his severance package, HP was able to save face with shareholders who have suffered a combined $16 billion hit to the value of their stock since Hurd's ouster.
Hurd's appearance on stage Monday reinforced the important role Hurd is expected to play at Oracle despite the controversy, which he did not address during his talk at the conference.
Hiring Hurd was a coup for Oracle. Ellison, who is also Hurd's tennis buddy, is shifting Oracle into direct competition with the computer and server maker it has long partnered with. Rivalry between HP and Oracle intensified when Oracle closed its acquisition of Sun Microsystems early this year; HP has said hiring Hurd has further strained the companies' alliance.
After the settlement was announced, Ellison said in a statement that the companies would continue to "build and expand" on their decades-long partnership. HP made a similar pledge.
"HP and Oracle have been important partners for more than 20 years and are committed to working together to provide exceptional products and service to our customers," said Cathie Lesjak, HP's interim CEO, in a statement.
While HP's stock price plunged after Hurd's departure, Oracle's has leaped since it brought him on board. Hurd was reviled by many HP employees for the depth of his job cuts, but revered on Wall Street for his cost-cutting and stewardship in leading HP into new markets beyond printer ink and personal computers.
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.
Hurd resigned from HP under pressure from the board, which found no merit to the harassment accusation during its investigation but did uncover inaccurate expense reports that didn't show that Hurd dining with the marketing contractor who would later become his accuser. He insists he didn't prepare his own expense reports and points to the fact that his accuser's name was on some of his other expense reports.
HP, for its part, appears to be getting closer to naming Hurd's replacement. Many observers envision an insider who was already on board with Hurd's vision for the company's future scoring the gig. Top candidates include Todd Bradley, chief of HP's personal computer division; Ann Livermore, head of services, servers, storage and software; and Vyomesh Joshi, head of HP's printing division.
HP is expected to announce its selection before a meeting with analysts scheduled for next week.