Live Nation Entertainment Inc., a major player in the concert promotion business, hired Michael Cohl, a stated "legend in the concert industry," as its chairman in 2008. A large part of Cohl's allure was his expected ability to ink major stars to contracts covering concerts, recordings and sponsorship deals.
The parties' views on how to conduct business began to diverge radically almost immediately, and Cohl resigned. His complex severance agreement with Live Nation included a noncompete clause, which is presently at issue in a federal lawsuit brought by the company against its former executive.
Under the terms of the agreement, Cohl was required to pay Live Nation nearly $10 million over a two-year period following his resignation. A portion of that payment was for Cohl's purchase of parts of Live Nation's business; the other was essentially money that the sides agreed would enable Cohl to buy back rights to compete against Live Nation in businesses related to theaters and museums. The contract stipulated that, absent the pay back, Cohl could not compete against his former employer.
Live Nation states that, while Cohl did pay the first installment of more than $4 million, he has refused to pay the remainder, and the case is now before a judge in a federal district court in southern Florida.
A central question to be determined is the reasonableness of the noncompete language, the outcome which is critical to Cohl, given that he is a major producer of Broadway plays and also actively involved with a traveling museum exhibition.
Related Resource: online.wsj.com "Live Nation Sues Former Chairman over Severance Agreement" November 20, 2010