Nortel Networks has agreed to pay Motorola $11.5m (£6.8m) for the right to hire former Motorola president and chief operating officer Mike Zafirovski.
Zafirovski left Motorola in February and last month Nortel Networks announced it had hired him to replace Bill Owens as its new chief executive officer.
In response, Motorola immediately filed a lawsuit citing non-compete clauses in Zafirovski’s previous employment contract, which it said prevented him from joining Nortel – a big rival of Motorola’s in network infrastructure and other technologies.
A settlement to the legal action now allows Zafirovski to join the company, provided he pays back the $11.5m he received from Motorola when he left. This amount will be covered by Nortel.
Motorola had sought to prevent Zafirovski from joining Nortel for two years and to block him from hiring Motorola employees for Nortel.
Under the terms of the settlement, Zafirovski and Nortel have agreed not to recruit Motorola employees and to limit his communications with certain unnamed companies, which include Motorola customers.
The settlement also limits Zafirovski's ability to advise Nortel “on competitive strategy or analysis relative to Motorola”, Nortel said.
Zafirovski is due to start at Nortel on 15 November.