Top tech execs to be grilled for no-poaching agreement

The execs made a pact not to lure each other's talent away, and now they're coming under fire

Financial trends and news by Faith Merino
January 18, 2013
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When it comes to business, everyone loves competition—that is, until the guys at the top decide that competition is too costly. Chief executives from Google, Apple, Intel, and others are now being called in for questioning regarding an agreement not to poach one another’s employees. A similar lawsuit brought forth by the DOJ was settled in 2010, but a group of former employees are pushing forth with a civil suit. In a new development, U.S. District Judge Lucy Koh ordered Apple CEO Tim Cook to appear for questioning.

The plaintiffs’ attorneys have pretty damning evidence, including emails between the late Steve Jobs and former Google CEO Eric Schmidt, all stemming from an agreement made between Apple, Google, Intel, Intuit, Pixar, and Adobe Systems not to attempt to lure one another’s top talent away with promises of a better life. As it turns out, that can get pretty expensive. Better to simply forge a pact not to go after one another’s employees.

Consequently, five ex-employees have filed a civil suit in which they claim they claim their pay was essentially capped.

A Google spokesperson gave us the following statement: “Google has always actively and aggressively recruited top talent.”

But that doesn’t seem to jibe with an email exchange between Eric Schmidt and Steve Jobs, in which Jobs complained about a Google recruiter cold-calling Apple employees. “I would be very pleased if your recruiting department would stop doing this,” Jobs wrote to Schmidt in March 2007. Schmidt then emailed Google’s recruiting department: “I believe we have a policy of no recruiting from Apple and this is a direct inbound request. Can you get this stopped and let me know why this is happening? I will need to send a response back to Apple quickly so please let me know as soon as you can.”

Apple’s lawyers had tried to shield Tim Cook from questioning, claiming that at the time of the agreement, Cook was a lowly COO and was not privy to the pact. Judge Koh doesn’t buy it.

"I find it hard to believe a COO would have no say over salary and compensation for all employees," said Koh.

Apple could not be reached for comment.

Eric Schmidt, now Google’s Chairman, will be questioned on February 20. Intel CEO Paul Otellini will also be questioned. 


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