Sprint hires BellSouth's No. 2 exec as new CEO

ATLANTA -- Hours after receiving permission from an arbitrator, Sprint Corp. named the No. 2 executive at rival BellSouth its new chief executive.

The Overland Park, Kan.-based telecommunications firm said Gary D. Forsee, vice chairman of BellSouth and chairman of its wireless subsidiary, Cingular, will take over Wednesday. A former Sprint executive, Forsee will also take a seat on the company's board.

Forsee graduated from Central High School in Cape Girardeau in 1968.

"It is a pleasure to be a part of this great company again," Forsee said in a statement released by the company late Tuesday night.

"Sprint has an impressive heritage of innovation and customer service," Forsee said.

"When you combine that with the company's strong financial position and enviable set of assets, you quickly realize the incredible potential Sprint possesses."

The 52-year-old Forsee replaces William T. Esrey, who was forced out by Sprint's board over their concerns about his use of a questionable tax shelter. Sprint said late Tuesday night Esrey will continue in his role as chairman during a transition period.

Sprint's appointment of Forsee came after former federal Judge William Webster ended a two-month dispute between Spring and BellSouth over his fate.

Webster, also a former CIA and FBI director who conducted three days of closed-door hearings last week, imposed several restrictions Tuesday on Forsee in his arbitration ruling to protect BellSouth from the disclosure of trade secrets. Among them is that Forsee can not participate in any merger and acquisition discussions or sales discussions for 12 months.

Sprint's board said late Tuesday the conditions contained in the ruling are acceptable.

In his 18-page order, Webster said that in his position at BellSouth, Forsee was at the nerve-center of its operations. He was intimately involved in its merger and acquisition discussions, and has knowledge that could hurt BellSouth if passed on to Sprint, Webster said.

However, Webster said, "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."

In addition to the other restrictions, Forsee can't participate in any consideration of or efforts to solicit or hire any employees of BellSouth or Cingular for 12 months. He also can't participate for 12 months in any strategies relating to the joint marketing of wireline and wireless services or combinations of local and long-distance services in those regions served by BellSouth.

Forsee joined BellSouth in 1999 after nearly a decade in various positions with Sprint.

Atlanta-based BellSouth went to court in January to stop Forsee from taking William Esrey's job as chief executive of Overland Park, Kan.-based Sprint, citing concerns that he could disclose key information about BellSouth's business.

BellSouth wanted Forsee to honor a noncompete clause in his contract that prevents him from taking a job at a rival company for 18 months. BellSouth and Sprint both sell long-distance service in nine Southeastern states and they compete nationally for wireless customers.

A temporary restraining order preventing Forsee from jumping to Sprint expired Tuesday and was rendered moot by the arbitrator's decision, which is binding.

Webster was only permitted to review the confidentiality clause of Forsee's employment agreement. He was not permitted to review the non-compete portion of Forsee's contract.

BellSouth said it will still pursue its civil remedies pending before the Georgia Supreme Court regarding the non-compete clause "to ensure that the interests of BellSouth's shareholders are fully protected."

Esrey's departure has been expected since Sprint announced in November that he was undergoing chemotherapy treatment after being diagnosed with lymphoma. But analysts had expected chief operating officer Ronald LeMay to be his successor. Sprint has said it is concerned with Esrey's and LeMay's use of a questionable tax shelter.

Esrey and LeMay have both acknowledged they are being audited by the IRS. They could face tax bills in the millions if the tax strategy recommended to them by Ernst & Young, the Sprint auditors, is disallowed.

Esrey, 63, was elected chief executive officer of Sprint in 1985 and chairman in 1990.

News of the arbitrator's decision came after the markets closed.

Shares of BellSouth closed at $22.44, down 35 cents, in trading Tuesday on the New York Stock Exchange. Shares of Sprint PCS, Sprint's wireless division, closed at $4.20, up 17 cents. Its wireline stock, Sprint FON, closed at $11.85, up 20 cents.

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Sprint: http://www.sprint.com/

BellSouth: http://www.bellsouth.com/