Cisco Bans Lloyd, Moore From Working At Rivals HP, Palo Alto, Amazon, 26 Others

Cisco is making sure its departing presidents don't immediately join a competitor by banning employment for one year at specific companies such as Hewlett-Packard, Dell and Amazon Web Services, according to an 8-K form Cisco filed with the U.S. Securities and Exchange Commission.

President and Chief Operating Officer Gary Moore and President, Development and Sales Rob Lloyd each signed a separation agreement and general release from Cisco effective July 25, which included a one-year noncompete agreement, saying they will not work for a total of 29 competitors or risk losing benefits.

The list includes a number of the San Jose, Calif.-based networking giant's networking and cloud rivals, including AWS, Arista Networks, Dell, Ericsson, HP, Juniper Networks, Microsoft, Nokia and VMware.

[Related: Partners: Robbins' 'Bold' Executive Moves Will Make Cisco More Agile]

"The place where a guy like Rob could really hurt Cisco would be at HP, Dell, Amazon [Web Services], one of those big players," said a top executive at a Cisco Gold partner from the Northeast, who declined to be identified. "He'll turn up next as the CEO somewhere."

Security companies banned include Check Point Software Technologies, FireEye, Fortinet, Symantec and Palo Alto Networks.

"A year or a year-plus ago, it would have been very odd to me that there would be such a focus on security companies," said Tim Hebert, CEO of Atrion Networking, a Warwick, R.I.-based Cisco Gold partner. "But since Cisco bought Sourcefire to integrate that, I see a new, unprecedented level of focus on security moving forward. So it makes a lot of sense, because they're really trying to become the No. 1 player in the security space."

The remainder of the banned companies on the list are Alcatel-Lucent, ARRIS Group, Aruba Networks, Avaya, Brocade Communications, Citrix Systems, Extreme Networks, F5 Networks, Huawei Technologies, IBM, Lenovo Group Limited, Motorola Solutions, Polycom, Riverbed Technology and Ruckus Wireless.

If either Lloyd or Moore were to become an employee at one of the 29 companies listed prior to July 25, 2016, he would forfeit and must refund the benefits received under the agreement. Both executives are entitled to cash payments equal to 18 months' base salary and a target bonus award -- which comes to $2.2 million for Lloyd and around $2.27 million for Moore -- paid during calendar year 2016, in addition to other benefits, according to the 8-K form.

In addition, neither executive can join any of the competing companies' boards of directors, advisory board or enter into any consulting arrangements.

"It's a good move for Cisco because it takes out the potential confusion that could exist in the market if one of those top-level executives moves somewhere else, and you have to deal with the noise and distraction with a senior executive going to one of your top competitors," said Hebert.

Hebert said Cisco listing out the exact banned companies is an effort to not repeat what occurred in 2011 when several Cisco executives left for Juniper.

"There was a lot of concern of what happened to Cisco, what Juniper was doing, so people are making it very clear they're not going to work for a direct competitor where Cisco has staked out claim," said Hebert. "For employees at Cisco and for channel partners like us, it just removes that confusion."

Partners were somewhat concerned that the noncompete agreement was only for one year instead of two.

"That does seem on the short side for a guy like Lloyd. These guys got plenty of money, they can sit out and hang around for a while before they want to jump into anything," said the Northeast executive. "You never know what the guys at Oracle might do. They haven't been tremendously successful with their hardware business, and a guy like Rob could [help]."

CRN reached out to Cisco for comment and will update if we hear back.

The departures of Lloyd and Moore stem from incoming CEO Chuck Robbins' vision of a "flatter" leadership team. Partners are expecting more executives to leave within the next two weeks as Robbins reveals his new leadership team and Cisco's new organizational structure.

CTO Padamasree Warrior is expected to be among the next executive to leave after an unconfirmed report Monday that her last day at the company will be July 25.

PUBLISHED JUNE 2, 2015