Apotheker Hiring Hurls Competitive Challenge at Oracle

By Fahmida Y. Rashid  |  Posted 2010-10-01 Print this article Print

Many analysts felt the appointment filled a gap in HP's senior talent pool, which was already strong in hardware and services. Having added an executive with extensive software experience, "HP is now a three-way player," wrote Technology Business Research analyst Stuart Williams.

Williams predicted that Apotheker will "reinvigorate" the portfolio under the HP Software and Enterprise Server, Storage and Networking divisions as a first step. He also noted that HP had recently hired ex-Microsoft executive and Windows veteran Bill Veghte as the head of the HP Software and Services division.

The HP board also named former Oracle President Ray Lane as "nonexecutive" company chairman, which is apparently an advisory role. Currently a managing partner at venture capital firm Kleiner Perkins Caufield & Byers, Lane will take up his post Nov. 1, the same day as Apotheker's start and the beginning of HP's fiscal year.

There has been a lot of friction between HP and Oracle in the past few months, beginning with Oracle CEO Larry Ellison lambasting the board for firing Hurd, Hurd joining Oracle as co-president, and HP's lawsuit attempting to block the appointment. While the two companies acted like cordial friends at the recent Oracle OpenWorld show in San Francisco, HP's decision to name the former head of Oracle's bitter enterprise software rival as its new CEO and then name a former Oracle president and CEO to HP's board can only be viewed as a direct challenge.

On the conference call, Apotheker merely reiterated HP's commitment to combining hardware, software and services, saying, "We will execute our strategy, and I am sure Oracle would focus on their own strategy as well."

Despite its reaffirming the company's strategic direction, no one foresaw Apotheker's appointment. Rumors had focused on internal candidates, with head of PC division Todd Bradley and enterprise chief Ann Livermore being mentioned most frequently, but there had been hints that the company would bring in an outsider instead. Bradley had even hinted at the possibility of his taking over the top job at TechCrunch's conference earlier in the week, answering a question with, "You can ask me next year, if I take the position."

"Our board of directors cast the net very far and very wide both internally and externally," Robert Ryan, the lead independent director of HP's board, said on the call. "We ended up with six people who could have done the job."

Apotheker has a big job to do, and he is clearly going to be paid very well to do it. According to papers filed with regulators, Apotheker will receive a $4 million signing bonus and a $4.6 million relocation allowance to work at HP. Within 30 days, HP will grant the new CEO 156,000 HP restricted shares-worth over $6 million at the current share price-vesting over two years. He will receive 728,000 more for meeting performance goals that will vest over three years. He is also eligible for a cash bonus between $2.4 million and $6 million in 2011, and his annual salary is $1.2 million.

"My heart is in being a CFO, and my family and I are pleased I'm going back to that," said HP Chief Financial Officer Cathie Lesjak, who had been acting as interim CEO. "I have never felt more confident about our business."


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