Update 05/29/09:
Judge calls bluff made by HP's new networking boss!
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The Boston Globe is reporting that new HP Networking boss David Donatelli (executive vice president of HP's Enterprise Servers, Storage and Networking) is suing his former employer EMC in California state court seeking to void his non-compete agreement.
After paying Donatelli more than $17.2 million over the last 3 years, it should be no surprise that EMC has sued in Massachusetts state court to have Donatelli's non-compete agreement enforced.
Unfortunately, EMC's Key Employee Agreements (KEA) are not on file with the SEC or in any EMC filing, however, according to EMC's most recent Proxy Statement Schedule 14A, filed (Mar. 26, 2009) with the U.S. Securities and Exchange Commission:
In January 2009, the Compensation Committee approved, at Mr. Tucci's recommendation, a discretionary bonus of $70,000 for Mr. Donatelli in recognition of his role in driving the rapid implementation of flash technology in our storage products and the strong performance of our Information Storage business in 2008.
Donatelli's EMC responsibility (the storage unit) declined by $348.5 million (13%) in revenue for 1Q09 vs. 1Q08.
Donatelli is the beneficial owner of 1,968,366 EMC common stock shares (1,737,400 of those shares are by virtue of options to purchase those shares).
Additionally, Donatelli holds 301,955 restricted EMC stock units.
For 2009, Donatelli's EMC cash compensation was reduced by 10%, his base salary was reduced by 10% as well as his target annual bonus too.
Donatelli's 2009 base salary was only $630,000.
$70K less than his 2008 base salary of $700,000.
Donatelli's 2009 total target annual bonus opportunity dropped by $50K to $450,000 from his 2008 opportunity of $500,000.
For 2008, Donatelli's EMC cash bonus plans included:
$200,000 - Corporate Incentive Plan
$100,000 - Management by Objectives Plan
$200,000 - Information Infrastructure Incentive Plan
For 2009, Donatelli's EMC cash bonus plans included:
$180,000 - Corporate Incentive Plan
$45,000 - Management by Objectives Plan
$135,000 - Information Infrastructure Incentive Plan
$90,000 - Corporate Quarterly Operating Plan
David Donatelli's Total EMC Compensation:
2008 - $5,412,528 Financial results
2007 - $5,391,193 Financial results
2006 - $6,435,336 Financial results
Interesting to note:
Mr. Donatelli will also be entitled to exercise his vested in-the-money stock options upon a termination of employment, other than termination for cause. As of December 31, 2008, these stock options had a cash value of $510,050.
Related stories:
Judge calls bluff made by HP's new networking boss!
Court rules new HP executive vice president is officially AWOL from EMC
What kind of person takes $17.2 million from his employer and then seeks to void his non-compete agreement?
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Modern Day Slavery
Dear Brad,
Thanks for the article. It really brings to light another big question:
What type of entity can drop your pay, make you work more, insist on total committment and deny your rights to exercise your freedom of choice?
You got it Brad: MODERN DAY SLAVE DRIVERS.
David's total pay had decreased by a million dollars ($1M) from 2006 to 2008. And he had endured yet another ten percent (10%) drop in 2009. However, his responsibilities and performance had been increasing for the same time-period. Yet we think it is ok for a corporation to deny him his right to choose his associations?
I think you owe David an apology for your closing statement. He has shown a level of loyalty, committment and dedication to EMC that many of us would not.
$17.2 million over 3 years
Are you saying that EMC's payment to Donatelli of $17.2 million over the last 3 years should not be legal grounds for enforcement of the non-compete agreement that he signed?
Donatelli's loyality?
EMC Financial Results:
"On Jan. 7, EMC announced that it would trim about 2,400 full-time jobs, or about 6 percent of the staff, in light of the recession.
"However, Tucci said that it was likely no more layoffs would be necessary this year after the pay cuts are instituted."
It's my personal opinion that Donatelli is the "poster child" for overpaid executives whose sense of entitlement and grandiose pompousity has become a plague that has infected and become the scourge of corporate America!
Sincerely,
Brad Reese
BradReese.Com Cisco Refurbished
Is this about class-warfare
Is this about class-warfare or the rights of every individual to make their own choices?
He worked for them and he got paid. That really should be the end of the story.
I don't like "overpaid executives" anymore than the next guy. And I will be quick to point out that I do not make anything close to these figures being quoted, nor am I some executive. However, EMC (and their executives) made a decision to lower pay and layoff. Right decision or wrong decision, they should be ready to deal with the consequencies without attempting to enslave their workers. I am assuming that at the time these agreements were being signed, he had a higher pay. does this mean that the big corporations can change the terms of the agreement at anytime and still expect the individuals to stay committed.
If David's exit from EMC was that big of a risk to the existence of EMC, then any business school grad who did not fall asleep during the Risk Assessment class would think twice about giving him a reason to leave. On the other hand, why not use the money being paid out to the lawyers for this lawsuit to either restructure or train their existing employees to be more innovative? This is the tech industry Sir, they have have stay innovative or they will cease to exist.
What if, what if he made $60,000 and now has to make do with $35,000 - $40,000? Or if he got laid-off completely? Would that make it okay for EMC to still sue? Let's look at the principle here and not just this class-warfare thing that I admit to being guilty of also. He has given this company over twenty years of his life and now he must be forced to waste his skills? Where else can he effectively use his technology skills if not at some other technology company? What if it were Cisco hiring him, would you be dragging him thru the dirt like this?
You cannot get a job these days without being made to sign these non-compete and non-disclosure agreements, but I don't see the corporations giving us any employment guarantees. Corporations do what is in the best interest of the corporation, and that is what they should do. Likewise, the individuals should do what is in the best interest of themselves and their families or dependents... that's how a capitalistic society works.
Or should EMC, IBM, HP, GM, Ford and all other companies being forced to lay-off workers due to the recession go after all their former employees who happen to find jobs in other companies within the same industry?
I hate overpaid executives just like you, but right is right and wrong still stinks...
Unscrupulous Behavior
This is not class-warfare, it's simply a case of classic:
Unscrupulous Behavior
-----------------------------------
"IBM’s recent announcement in which they detail the broadening of their joint Brocade/Foundry GTM strategy has been misinterpreted as an anti-Cisco strategy.
"In reality, it’s an anti-HP strategy. IBM sees HP turning their 'aircraft carrier' to refocus on the Data Center as defined by Cisco’s UCS announcement (e.g. servers, storage and networking).
"Proof point: The hiring away of David Donatelli from EMC (storage experience with EMC, along with admittedly valuable Cisco-EMC DC 'inside baseball' knowledge) to lead their newly defined Data Center business."
-----------------------------------
It's obvious that Donatelli is "cashing-in" on the inside competitive knowledge that he agreed not to do when he signed his non-compete agreement with EMC.
Once more in my opinion, this is "unscrupulous behavior" by Donatelli and not class-warfare!
Sincerely,
Brad Reese
BradReese.Com Cisco Refurbished
You miss the point of the comment
David signed the non-compete, in return he worked for EMC and received $17M in compensation. If he didn't want to abide by the non-compete, he shouldn't have signed the agreement, and sealed that deal by cashing the checks.
You cannot get a job these
You cannot get a job these days without being made to sign these non-compete and non-disclosure agreements, but I don't see the corporations giving us any employment guarantees. Corporations do what is in the best interest of the corporation, and that is what they should do. Likewise, the individuals should do what is in the best interest of themselves and their families or dependents... that's how a capitalistic society works.
Or should EMC, IBM, HP, GM, Ford and all other companies being forced to lay-off workers due to the recession go after all their former employees who happen to find jobs in other companies within the same industry?
If David's exit from EMC was that big of a risk to the existence of EMC, then any business school grad who did not fall asleep during the Risk Assessment class would think twice about giving him a reason to leave. On the other hand, why not use the money being paid out to the lawyers for this lawsuit to either restructure or train their existing employees to be more innovative? This is the tech industry Sir, they have have stay innovative or they will cease to exist.
What if, what if he made $60,000 and now has to make do with $35,000 - $40,000? Or if he got laid-off completely? Would that make it okay for EMC to still sue? Let's look at the principle here and not just this class-warfare thing that I admit to being guilty of also. He has given this company over twenty years of his life and now he must be forced to waste his skills? Where else can he effectively use his technology skills if not at some other technology company?
I hate overpaid executives just like you, but right is right and wrong still stinks...
Non-compete agreements
In my opinion, non-compete agreements should be enforced!
The key legal test here will be if the Court decides that Donatelli was fairly compensated by EMC for his agreement not to compete!
Sincerely,
Brad Reese
BradReese.Com Cisco Refurbished
I don't think they should be
I don't think they should be enforced at all. If the government can't regulate and manipulate, then neither should the corporations. What they do is not in the interest of innovation or competition. If Bill Gates could have owned the world he would have licensed the air. Just say no to this bologne! If they didn't want him to leave, and he was so valuable, maybe they should have tried harder to keep him there without making him a slave to the corporation.
Lazy managers. Don't want to try to make him stay, so they make him sign a non-compete.
Modern Day Slave Drivers?
Modern Day Slave Drivers? Are you a fool? Slaves do not get paid, this guy is a multi-millionaire. The absurdity of that statement invalidates anything else you may say.
No I am not a fool. And yes
No I am not a fool.
And yes some slaves did get paid. Infact, some made enough money to buy their freedom and those of their families or spouse.. However, that is not what we are conversing about here... another discussion for another day.
Please check your facts before passing judgement. Lets keep the conversation civil and intelligent.
Thanks,
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