Arbiter conditionally OKs Forsee’s move to Sprint

Judge William Webster ruled late yesterday that Gary Forsee could leave BellSouth, where he has served since 1999 as vice chairman of operations, to become chief executive officer of Sprint.

Sprint officially named Forsee as its CEO immediately after Webster’s ruling. He will replace William Esrey, who will continue as Sprint’s chairman during a transitional period, the length of which Sprint has not disclosed.

Webster said there was no precedent for issuing a permanent injunction against Forsee’s migration to Sprint based solely on the threat that he would inevitably share sensitive and proprietary information about BellSouth.

However, Webster issued a comprehensive set of restrictions Forsee will have to follow to safeguard such information. These restrictions must be acknowledged by a resolution of Sprint’s board of directors as a condition of Forsee’s employment, Webster said.

The restrictions prevent Forsee from disclosing financial, marketing, product development, cost, pricing, and merger and acquisitions information concerning both BellSouth and Cingular Wireless, the joint venture with SBC Communications in which BellSouth owns a 40% stake. This restriction is in effect for the next 18 months, which corresponds to the time remaining on Forsee’s current contract with BellSouth.

In addition, Forsee cannot participate for the next 12 months in any discussions at Sprint concerning mergers, acquisitions and asset sales. He also cannot participate in any sales calls on behalf of Sprint for the same period.

Finally, Forsee is precluded for the next year from participating in any plans for direct competition with BellSouth or Cingular, from lobbying state utility commissions in BellSouth’s nine-state region, from attempting to solicit or hire any BellSouth or Cingular employee, and from participating in the development of strategies for the joint marketing of wireline and wireless services, or local and long-distance services, in BellSouth’s footprint.

“We're satisfied with the restrictions,” said BellSouth spokesman Jeff Battcher.

Sprint’s board and Forsee both have accepted Webster’s conditions, said Sprint spokeswoman Melinda Tiemeyer.

Though such restrictions often are difficult to enforce, BellSouth has little to worry about, said Blake Kirby, vice president at Adventis. “Sprint executives are pretty honorable, high-integrity people. If they say they’re going to do something, they’re going to do it,” he said. “If he were going to some less reputable company, it might be an issue.”

BellSouth noted that Webster only addressed the confidentiality clause of the employment agreements that Forsee signed when he first joined the RBOC and later when his duties were broadened, and not the non-compete clause. BellSouth has maintained that Fulton County, Ga., Superior Court Judge Stephanie Manis erred when she ruled that Webster could only address the confidentiality clause. BellSouth appealed that decision and the matter currently is before the Georgia Supreme Court.

“It’s precedent setting that a judge would tell an arbitrator what he can and cannot rule on,” Battcher said.

In addition, BellSouth and Cingular Wireless jointly filed suit in federal court against Sprint for allegedly pursuing and interfering with a contract employee. Webster has said he would reopen arbitration “if any other court” rules in favor of BellSouth on the non-compete issues, Battcher said. If that were to occur, BellSouth would seek a restraining order to prevent Forsee from working as Sprint’s CEO for the 18 months he has left on his contract with BellSouth. The RBOC has no interest in compensating Forsee for leaving, he added.

“We’ve said from the very beginning that all we want out of this is for Mr. Forsee to honor the contract with BellSouth that he signed and was richly compensated for,” Battcher said.

Should BellSouth successfully block Forsee – who had spent a decade at the interexchange carrier prior to joining BellSouth – it probably would end any chance he has of returning to Sprint, Kirby predicted.

“It would be unworkable,” he said. “So much can happen over eighteen months that you wouldn’t want to be without a CEO for that length of time.”

However, Kirby acknowledged that Sprint could extend the transition period and keep Esrey in place as CEO until Forsee is able to come on board.