I'm sure many of us glanced over this article in the Chronicle's Business Section today, seeing another corporate lawsuit and moving right along to the comics. Mark Hurd, the new CEO and board member of Oracle, stares innocently out of his thumbnail, clearly the victim of another henious lawsuit in a sea of corporate suing. Right?It turns out that Mr. Hurd, the recent CEO of HP, Oracle's competitor, recently resigned from his job there after being sued a first time for sexual harassement, which led to the discovery that he had misappropriated funds, a scandal that forced him to resign. "Hurd, however, reportedly walked away with a $12.2 million severance payment and nearly $16 million worth of HP stock." Huh? Now, HP is suing Hurd again for accepting Oracle's offer, insisting that he will divulge trade secrets to the rival company, harming HP's customers and business. Suddenly, Hurd's innocuous thumbnail gets a little less sympathy.
First of all, it's remarkable that a man can get sued once, walk away with nearly 30 million dollars, join the rival company, and get sued again. How does this happen? Are we as a nation responsible for letting wall street and big execs like Hurd get away with millions of dollars? It's pretty clear that this is an abuse of capitalism, an exploitation of the system driven not by hard, honest work, but by sheer greed and cunning. This raises serious questions about what's happening to our nation today. Is/should Hurd be allowed to just evade lawsuits like this and slink off with millions? And if the answer is no, how are we as a nation supposed to fix this problem? Should the federal government step in and create change? And is there any way to reform "capitalism" so it's not associated with "greed"? Clearly we have a much better economic system than, say, socialism, but it seems that America today is taking capitalism in a direction that, overall, could be detrimental to our national health, or, to say the least, is just not fair. Thoughts?
12 comments:
The law suit against Mark Hurd for joining Oracle wont be held up in a court do to California. “California has a strong public policy against enforcing noncompete clauses.” (Wall Street Journal.) California courts encourage competition between companies in the same field and the allegation of disclosing trade secrets wont be enough to stop this hiring. HP will need "smoking gun" evidence to get the law suit in their upper hand. Regarding the other law suit that deals with sexual harassment; its sad to see people not held responsibly for their actions and even if the money is guaranteed, there must be laws or clauses that can take that guaranteed money away from the recipient for irresponsible behavior.
In a video game when you find the shortcut in a level, you finish the level faster. In baseball when you hit the ball into a pocket away from the outfielders, you round extra bases. When the rules to a game are set and you find a way to play by the rules and still succeed wildly with your strategy, that doesn't mean the player should be punished, but the rules to the game are broken. If a man on the street gave you the opportunity to legally earn $500 a day, I'm sure that many of us would take it. I understand that these analogies don't fit perfectly with our judicial system, but I personally judge the system and not the man. Just food for thought.
I don't believe that it is unfair or an abuse of capitalism that Hurd managed to walk away with a large severence package. Severence packages, especially at that level of business, are normal. I feel that to not acknowledge Hurd's dedication and hard work to get to that position and severence package is unfair.
While it is true that Hurd evaded a lawsuit (by paying a settlement mind you), doing so using the method he used is acceptable, in my opinion. Then again, that stems from my belief in social dwarinsim, so not many would agree with me. There really isn't any reform necessary.
Do you mean to say that severance packages of 30 million dollars are normal for execs? Why should that be any reason to be less concerned? And I personally find it hard to believe that a dedicated and honest man gets sued for sexual harassement, not to mention the funding scandal that he resigned because of in the first place. I agree with your perspective on social darwinism, Dan, but only to the extent that truly "better" businessmen should be allowed to rise to the top. Mark Hurd does not seem to fit that profile. I fail to see how paying a settlement that amounts to a fraction of his severance is a reasonable punishment for his actions in any way.
I think its fine that he evaded the lawsuit by paying off the settlement; if the person suing is okay with it then that's their business. I don't think Hurd should have gotten such a large severance payment when they found out he had misappropriated funds. As for him getting hired by HP, more competition the better.
All I can say is that this is business. The business world may not be the most fair world, but this is reality. Companies use severance packages as a way to "fire" people in a way that doesn't anger the public. To simply fire Mark Hurd on the grounds of allegations of sexual harassment and misappropriated funds could be damaging to HP's image. First off, Hurd did not violate any company policies regarding sexual harassment and he paid a settlement (a legal maneuver in the judicial system). That is probably why HP gave Hurd a severance package, to get rid of him without firing him. His severance package is reasonable, in my opinion. First of, $30 million is proportionate to his last year's salary of $34 million with bonuses. And he was about to sign a 3-year contract worth $100 million with HP, so with this severance package he is actually taking less money. Hurd is also a successful businessman, with both HP and NCR. Knowing all this, I do not find the severance package unfair. I do not condone sexual harassment, but we have no evidence of him actually doing any of this. And we do not know the nature of his misappropriated funds. So to suggest he should punished more and paid less due to allegations is truly unfair, and even goes against the principles of our judicial system.
Furthermore, the allegation of Hurd not being a "truly 'better' businessman that should be allowed to rise to the top" is quite absurd as I look at it. The system of capitalism does not work as a monarchy does; there are no family dynasties. The system is set up so that "truly better" businessmen can, in fact, rise to the top. In this sense, Hurd's rise to HP's CEO position wasn't on accident. His twenty five year tenure at NCR Corporation ended with him at the CEO position and company profits soaring, with NCR's net income rising more than 4x from fiscal year 2003-2004. Moreover, with Hurd as HP's CEO, the company rose to lead to market in the sale of desktop & laptop computers, and HP's profits rose 6% in the middle of our recession.
Also, I'd like to emphasize that Hurd was found to NOT be in violation of company sexual harassment policies. Hurd's supposed "misappropriation of funds" was in fact less ominous than it sounds:
Fisher, the woman who accused Hurd of sexual harassment, organized events for customers & introduced company executives to each other. (She and Hurd would reportedly dine together often.) These "misappropriations of funds" were actually inaccurate expense reports connected to these meetings, painfully less significant than the term makes it sound. What's more, Hurd stated that he doesn't prepare his own expenses, which could be construed as quite normal for a man of his stature.
Since much of this story has already been thoroughly assessed by those who have commented before me, I'll leave the dead horse be. Straying from Hurd's situation a bit, I would like to specifically respond to "And is there any way to reform "capitalism" so it's not associated with "greed"?"
Well, I would answer this with a simple "no." Why do we have capitalism in the first place? Why has it worked so much better than socialism? Well, the general theory behind capitalism is that people are inherently greedy and that this greed will compel them to streamline their corporate exploits and increase their productivity, leading to a monetary gains for said individuals. At the macroeconomic level, these modified behaviors then serve to generally make an economy more efficient and more productive. Why have the numerous socialist societies in the world's history not achieved the level of success that capitalistic societies have achieved? This is largely due to the lack of potential to satisfy the boundless greed of the average man. So, by definition, we cannot do much to remove "greed" from "capitalism" without either completely remodeling capitalism to make it a pseudo-competitive economic system or fundamentally altering the mental processes of the average man. It's true that there will always be altruistic men in society, but for every Gandhi, we will have a thousand Madoffs.
Furthermore, I would like to take a different angle on your question and assert that capitalism is necessary to civilize greed. Capitalism balances greed the way that marriage balances lust. Think about it. Most successful businessmen are greedy, and this greed is the reason for their success. This greed forces them to take customer opinions into account and model their business's core values around satisfying customers, allowing their greed to serve beneficial, practical purposes.
Hurd is an intelligent and competent businessmen who legally secured a severance package from and left HP. He hit the ball into the gap in deep left-center fair and square. Thus, he should be allowed to earn how much ever his employers choose to pay him and work wherever he so desires.
I would like to respond to Amrit's comments about reforming the capitalistic system. While greed might lead to efficient, productive, and even good business tactics in some cases, there are also many cases where greed leads to cheating and unfair business practices, just to make a quick profit. Our reading "Everybody Does It" from "The Cheating Culture," contains various examples of companies misleading people and purposefully breaking rules and laws just to make a quick profit. This is a result of greed. I think that the federal government needs to put more regulations on the system, and the regulations need to be better-enforced. Those who are caught performing faulty business practices ought to be punished more severely; they should not be receiving millions of dollars.
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