Mike Zafirovski, former CEO of Nortel Networks
CEO Mike Zafirovski had a tough task in front of him when he took the reins at Nortel Networks from former CEO Bill Owens in 2005: The telecom giant was struggling to regroup and regain its footing after several years of setbacks. It was not to be, however: Instead of turning the ship around, Nortel's fortunes sank lower and lower even as the U.S. economy headed for a crisis.
Critics have had a field day with Zafirovski's leadership of Nortel: He failed to move fast enough to save the flailing telecommunications equipment provider, they say. When he did make a move, it was usually ill-timed and ineffective. And when Nortel was finally forced to file for Chapter 11 bankruptcy protection in 2009, he and his officers gave up and simply began dismantling the gargantuan provider, all the way down to its patents, which sold just this year for $4.5 billion to a consortium of technology companies.
Zafirovski's management track record prior to Nortel seemed to make him the perfect man for the task of downsizing Nortel into a leaner machine. From 2002 to 2005 he was president and chief operating officer of Motorola, in the midst of the company's downsizing efforts. Prior to that he was a 25-year veteran of General Electric, including 13 years as a president and CEO for five of GE's businesses, according to a Wall Street Journal biography.
Nortel, once valued at $250 billion, was having problems before his arrival, but Zafirovski's moves didn't seem to make a real difference. He laid off employees and began selling off assets, but the provider's stock price continued to drop as the business itself contracted. It is a damning view of how badly Nortel fared under Zafirovski: In 2007 shares were still selling at around $15; by the end of 2008 they were practically junk at 25 cents apiece.
24/7 Wall St.'s John C. Ogg, in a 2008 article, was openly critical of Zafirovski's track record and questioned whether he and his team were the wrong choice: Perhaps a more sales-oriented CEO from one of Nortel's competitors, taking a more aggressive, if risky, stance, would have made a difference in what happened to the company.
"This CEO was brought in to turn this ship around, yet all that has happened is that when it started turning the ship to the port side it never stopped turning into any real direction," Ogg wrote. "If the company did poorly when the segment was growing, itis very difficult to believe that Zafirovski as CEO will be the man to adequately lead during the coming storm. This CEO is making the new tongue-in-cheek name 'No-Tel' more and more accurate each day."
To add insult to Nortel's injury, the Canadian manufacturer paid out quite a lot to get Zafirovski--settling up for $11.5 million with a belligerent Motorola, which felt Zafirovski had violated a nondisclosure agreement by going to Nortel--and paid even more as he eased out the door in August 2009, giving him $2.3 million in compensation in the form of regular pay plus incentives and "other money," according to Billing World. This, just as retired Nortel workers were being told their pension benefits would be cut and yet another group of employees was laid off.
Zafirovski hasn't held a CEO position since, moving into consulting instead. He's currently a Senior Advisor to the Blackstone Group. Meantime, the picked-over carcass of the once-great Nortel still haunts western Canada and the U.S. northwest.