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.

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