OVERLAND PARK, Kan.-It’s official. An arbitrator’s ruling late March 18 has allowed Gary Forsee, vice chairman of Atlanta-based BellSouth Corp. and chairman of Cingular Wireless, to replace William T. Esrey as chief executive officer of Sprint Corp.
The arbitrator, William Webster, former CIA and FBI director, conditioned his approval on a series of restrictions, which will remain in effect for one year. Forsee cannot disclose trade secrets about BellSouth and Cingular related to, among other things, finances, strategies, new products and services, pricing plans and mergers and acquisitions. He cannot recruit BellSouth employees, lobby in BellSouth territory or make sales calls on some BellSouth customers.
“While Mr. Forsee’s agreement to protect BellSouth’s and Cingular’s confidential information is binding and enforceable, it does not preclude his taking the employment opportunity offered by Sprint,” Webster said.
Sprint’s Board of Directors said that Webster’s conditions are acceptable. However, BellSouth said it would continue its appeal to the Georgia Supreme Court, seeking a favorable ruling on the provision in Forsee’s employment contract that bars him from taking a job with its competitors for 18 months. BellSouth and Sprint compete for long-distance and mobile customers.
Early this year, BellSouth had sued in state court in Atlanta to block Forsee’s move to Sprint. Judge Stephanie Manis ruled the non-compete provision in Forsee’s contract is unenforceable. She imposed a temporary restraining order blocking Forsee’s move to Sprint to allow for the binding arbitration process she ordered on the confidentiality issue.
However, if the Georgia high court upholds BellSouth’s position on the non-compete clause, Webster said he would have to re-open the arbitration proceeding.
Forsee, who spent nearly 10 years with Sprint, including Sprint PCS, before moving to BellSouth in 1999, became CEO of Sprint and a member of its board of directors, effective March 19. He is expected to arrive in Kansas next week, said Mark Bonavia, a spokesman for Sprint.
“It’s a pleasure to be part of this great company again. Replacing Bill Esrey as CEO will be a huge task. He transformed Sprint from being primarily a telephone company to becoming a leader in local, long-distance and wireless communications-a truly remarkable achievement,” Forsee said in a statement issued by Sprint.
Sprint’s board of directors asked Esrey to resign as CEO late last year. This move followed disclosures that the Internal Revenue Service is investigating tax shelters, recommended by Ernst & Young, Sprint’s outside auditor, that he and Ronald LeMay, Sprint’s president and chief operating officer, each used to avoid paying taxes on at least $100 million in stock option gains apiece. LeMay also is stepping down.
Esrey, who is undergoing treatment for lymphoma, will “continue in his role as Sprint’s chairman during a transition period,” Sprint said.
