Hudson's Bay Company (HBC) has hired as its new CIO Janet Schalk, one week after a judge ruled that a noncompete contract she signed while working as Kohls' CIO wouldn't hold up under Wisconsin law. The move touched off a legal brouhaha that underscores how integral IT and the leaders who govern it have become to corporate growth.
HBC’s CIO Janet Schalk.
"Janet is a proven leader, and her success in creating a strategic information technology function that drives customer engagement across all channels will be critical in advancing HBC’s IT systems and supporting the company’s growth,” said Jerry Storch, CEO of HBC, which operates the Lord & Taylor and Saks Fifth Avenue brands, in a statement. Reporting to Storch, Schalk will oversee HBC's IT strategy, which includes a roadmap of common systems, integrated support, business architecture and analytics.
Resignation spurs legal action from Kohl’s
Schalk resigned from Kohl’s on July 22 to take the CIO role at HBC. In a bid to block the move, Kohl’s argued that Schalk signed a one-year agreement that restricted the kind of positions she could hold at competing companies. It claimed that such a move would violate the noncompete contract because she would be taking proprietary information to a competitor.
On August 11, Waukesha County Circuit CourtJudge Robert G. Mawdsley refused to bar Schalk from taking the post, arguing that Kohl's hadn't proven that the noncompete contract would stand up to scrutiny, according to reports in the Milwaukee Journal Sentinel. He said the agreement was more restrictive than noncompete pacts of more senior Kohl’s managers, such as CEO Kevin Mansell. He also didn’t view mid-tier apparel provider Kohl’s, and luxury good provider HBC as competitors.
“If Ms. Schalk made (Hudson’s Bay’s) IT platform, etcetera, better, I don’t see how that harms Kohl’s,” Mawdsley said, according to the Milwaukee Business Journal. He ordered that Schalk wait one week to join HBC to allow Kohl’s time to appeal the decision.
HBC officially announced the hire on Tuesday but declined to comment further. Kohl’s declined to comment due to “pending litigation.” Schalk did not respond to a request for comment via LinkedIn.
Noncompete litigation involving CIOs is rare
The number of published U.S. court decisions involving noncompete agreements rose 61 percent since 2002, as companies seek to prevent employees from taking intellectual property, trade secrets and customer data with them, law firm Beck Red Riden LLP told the Wall Street Journal in 2013. It’s become fashionable for companies to enforce restrictive covenants because they don’t want to leave open the invitation for other companies to raid their talent, Richard C. Schoenstein, a partner of Satterlee Stephens Burke & Burke LLP, told CIO.com yesterday.
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