It’s been swell, says Novell…

August 8, 2008

This week Novell Inc. (NOVL) and other distributors of Linux-based software announced a venture with IBM to offer PCs that will be, as the press release puts it, “Microsoft-free.” You gotta kinda like that.

But you don’t gotta kinda like the severance contract Novell filed Wednesday for former executive Thomas Francese, whose pending departure was announced in an 8-K in mid-June. Francese, who had a long career at the aforementioned IBM, had a rather short one at Novell, having joined in October 2005 as head of European sales. He was promoted a year later to EVP-Worldwide Sales.

Francese will walk off with a cash severance payment of over $1.9M, to be paid in a lump sum early next year. (To put this in perspective, his total comp for fiscal year 2007, including equity awards and over $200K in expat benefits, was around $2.1M.) Along with the cash, he’ll take home 68,310 stock options, 16,667 shares of restricted stock and 10,271 restricted stock units. Novell will also cover his medical and dental premiums for a year and pay for up to $100K in outplacement services.

In exchange for this largesse, Francese agreed to a longer and more restrictive noncompete than the one in his original 2005 contract, along with a broadly worded non-disparagement clause and the usual mumbo-jumbo releasing his former employer from liability for anything and everything.

Saying it was eliminating Francese’s position, the company praised his past performance and termed the separation “amicable.” Nevertheless, the contract contains this odd clause that bars Francese from any future hook-ups with Novell:

Executive agrees and recognizes that he has permanently and irrevocably severed his employment relationship with the Company, that Executive shall not seek employment with the Company or any affiliated entity at any time in the future, and that the Company has no obligation to employ him in the future.

This language wasn’t in Francese’s old agreement. Of course, it may just be something the lawyers threw in for the heck of it. Still, it’s not clear why a company tells an employee who supposedly left on friendly terms: “Nice work. Enjoy your severance package. Oh, and btw, never darken our door again.”

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