If you've had a chance to take a look at Motorola's lawsuit, it
leaves little doubt Mike Zafirovski was more than aware he had, among
other things, a two-year non-compete clause. In fact, this was
clearly spelled out last January when he entered into a
separation agreement in which he received $16,839,290. So why did he
apparently breach the agreement to accept the job with Nortel? There
are a number of theories, which include:
1. Zafirovski
really, really wanted the Nortel job to prove to the world - and
Motorola, which lured Ed Zander from Sun Microsystems to
become CEO - he could lead a Fortune 500 company. As a result, he
was willing to pay the cost, which means forking over $11,000,000
of his $16,839,290 severance package back to Motorola.
2.
Nortel really, really wanted Mike Z., which meant it was aware of the
risk involved given his agreements with Motorola but figured it
was the price to pay to get a world-class CEO to succeed Bill Owens,
who had been losing the faith of the investment community.
3.
Although Mike Z realized he had a two-year non-compete
agreement, his departure from Motorola really started in early 2004
when Zander was hired as CEO. While Mike Z agreed to stay on
for a year, you have to believe he started to disengage. It's like the
rest of us giving our two-week notice and then going out for long
lunches, shopping and talking with friends on the phone. If this was
the case, Mike Z may have thought he hadn't really "worked" for
Motorola for the past 22 months. As a result, maybe he believed
Motorola wouldn't make too much of a fuss if he took another job.
4.
Maybe Mike Z and Nortel don't believe he's breaching the non-compete
clause because Nortel and Motorola don't really compete. I mean,
Motorola makes wireless devices while Nortel sells telecom networking
equipment, right?
In any event, this lawsuit looks more like
a nasty legal battle than something Motorola's lawyers dreamt up to
annoy Mike Z and Nortel. I suspect Mike Z will not only have
to pay back the $11M but agreed to all kinds of restrictions if he
wants the Nortel job. Nortel will likely make it worth his while
financially given the last thing it wants or needs is another senior
executive hiring disaster on its hand.