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Nortel execs get $7.3 million in bonuses, employees get nada
As eight unnamed Nortel executives collect a total of $7.3 million in retention bonuses, thousands of former employees are being denied severance payments. Instead, Nortel has offered former U.S. employees early access to their pension plans and the company's retiree medical pan, but former workers would have to give up their severance payment claims in bankruptcy court to receive the pension early.
On Friday, an Ontario judge allowed Nortel to pay eight top-level executives, despite objectives from a lawyer representing 67 Nortel workers who were fired and didn't receive severance pay. Under terms of the incentive plan, the execs could get cash incentives of 100 percent to 183 percent of base salaries. While company has not disclosed salaries, executives at this level were paid in the million dollar range in the past.
A Nortel spokesperson said CEO Mike Zafirovski is not a part of any of the incentive plans approved by the court, but the company isn't saying if Mr. Z has a separate deal going.
Bonus talk is not making former employees happy, given that their only alternative is to stop suing the company for severance pay in exchange for early access to their pension plans and Nortel's retiree medical plan. Nortel has sent out fewer than 10,000 letters to former workers age 55 and over who had not received severance payments and have standing in the bankruptcy proceeding as creditors.
Trying to collect on severance pay through the bankruptcy court means that retirement-eligible employees can't get to pension money, since severance pay affect's an ex-worker's pension benefit calculation. Pass on severance pay, and the pension amount is reduced.
Needless to say, former employees are not happy about the choice, but some may take Nortel up on the offer because they need the pension cash now.
For more:
- News Observer covers Nortel's opt-out offer. Article.
- Ottawa Citizen discusses Nortel's executive bonus plan. Article.
Related articles
Nortel pledges to offer more re-org details - FierceTelecom
Nortel posts $2.1 billion Q4 loss, pushes bonus plan - FierceTelecom
More stories about Severance Payments Severance Pay Retention Bonuses nortel Executive Bonus Bankruptcy Court
Comments
Posted by Viridis | September 5, 2009 - 5:44am
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Posted by Anonymous | March 24, 2009 - 10:35pm
Most employees have not had a raise since 2000-2001. The average exec. salary has risen from 800k to millions. Yet it was the high employee salaries blamed for the first round. If anyone expected this to make sense...there would be no problem because it would not have happened. NT sold for 50 million what it bought for billions that it should not have bought and left its original buisiness model to where it has no clue what it is doing now.
Posted by Anonymous | March 24, 2009 - 7:39pm
It seems they should be given Nortel stock at a rate the stock should be at and have a vested interest in that stock doing well instead of cash and carry attitude towards companies and the companies well being and overall health.
Posted by Anonymous | March 24, 2009 - 9:33am
Nortel is run by a bunch of greedy ex-GE folks and some left-over old-timers. They feel entitled to get every $ they can from the company and the employees, particularly US, European, and Canadian employees, are expendable.
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