PRESENTERS

Alan Beadle, Siyu Lin, Zhengyi “Kitty” Shen, and Lara Simmons. Advisor: Sandra Chrystal pictured in the middle

TOPIC

Terminating Mark Hurd’s employment with Oracle Corporation

EXECUTIVE SUMMARY

Oracle’s current co-president, Mark Hurd, should be terminated from his position. He presents a significant ethical, legal and financial risk to Oracle while the company continues to employ him. The most effective way to resolve this problem is to end Mr. Hurd’s employment. In advocating this direction, we have weighed the inherent legal and financial risks against the benefits. Our finding is that the benefits are far greater.

Mr. Hurd has an unethical character as indicated by his actions at his former employer, Hewlett-Packard. A continuation of this behavior at Oracle will cause significant harm to the company. Mr. Hurd left Hewlett-Packard on August 6th, 2010 following discoveries of inappropriate conduct in an investigation into a claim of sexual harassment made by former pornographic actress Jodie Fisher and discrepancies of up to $20,000 on Mr. Hurd’s expense reports. Shortly after Mr. Hurd resigned and Oracle hired him as their co-president, the public learned that while at Hewlett-Packard, Mr. Hurd had leaked confidential information about the company’s plan to buy Electronic Data Systems Corp and that he had been involved in paying bribes to get U.S government contracts.

We have considered the following ethical, legal and financial points in suggesting the termination of Mr. Hurd’s employment:

Ethically, terminating Mr. Hurd is the right decision

• Employing Mr. Hurd causes more harm than good for Oracle, based on the legal and financial problems that he created for Hewlett-Packard.
• Continuing Mr. Hurd’s current employment sets a bad ethical example for employees and impacts public perception of the company.
• Terminating Mr. Hurd is ethical, since more good than harm results.

Legally, Mr. Hurd is a liability for Oracle

• Retaining Mr. Hurd leaves the door open for legal actions such as shareholder lawsuits, SEC investigations and Department of Justice, all of which Hewlett-Packard experienced because of Mr. Hurd’s actions.
• Defending against these inevitable lawsuits and investigations will cause Oracle to lose valuable time and money, face bad publicity and potentially pay big fines and penalties.
• Planning the termination can mitigated legal risks, such as a wrongful termination lawsuit.

Financially, Oracle is better without Mr. Hurd

• Ending Mr. Hurd’s current employment prevents potential governmental lawsuits and fines such as the $50 million levied upon Hewlett-Packard.
• Removing Mr. Hurd from his current position reduces the risk of a civil lawsuit from Hewlett-Packard, which could happen if Mr. Hurd shares company secrets.
• Showing that Oracle has ethical leadership makes employees less inclined to commit unethical acts themselves, saving the company money.
• Firing Mr. Hurd only impacts Oracle’s market cap in the short-term and any reductions in the company’s share price will be reversed in the long-term, as
• seen by Hewlett Packard’s share price rebounding in the months after Mr. Hurd’s ouster from that company.

For the future, we propose that Oracle make internal improvements by reinforcing the Code of Conduct at all levels of the organization and designating the Nomination and Governance Committee to review company business practices on a regular basis. Externally, Oracle needs to reassure the public that the company values business integrity and will always uphold the highest ethical standards.