NORTEL, the Canadian telecoms equipment maker, has agreed to pay $11.5 million (£6.5 million) to its rival Motorola, after poaching a former executive who had allegedly accepted $30 million not to join a competitor.

Nortel, which was facing a lawsuit from Motorola over its move to recruit Mike Zafirovski as its new chief executive, said yesterday that it had agreed to make the payment on his behalf.

Under the settlement, Mr Zafirovski, Motorola’s former president and chief operating officer, has also agreed not to deal with certain Nortel customers or to advise Nortel on competing against Motorola for a defined period. He has also agreed not to disclose Motorola trade secrets or confidential information.Nortel, which, like Mr Zafirovski, has not admitted to any violation of law or breaches of any agreements, has agreed not to hire Motorola employees for a specified period.

Motorola, the world’s second-largest mobile handset manufacturer, had claimed that Mr Zafirovski had breached his employment contract by taking the role of chief executive at Nortel. It claimed that his hiring by Nortel would result in the disclosure of trade secrets and said that the move presented a “serious threat” to its business.

Motorola had said that Mr Zafirovski had accepted the post, which he will take up this month, “despite being paid well over $30 million in cash, stock and stock options” in exchange for an agreement not to take a position with a competitor for two years after his departure.

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