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Motorola freezes pension plans, salaries; execs take pay cuts
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Motorola announced it would freeze U.S. pension plans, stop matching company 401(k) contributions, halt most salary increases for 2009 and cut executive pay as the handset maker continues reeling amid the economic recession.
The company said beginning March 1, it would free U.S. pension plans, eliminating future benefits. However, Motorola said it would continue to provide funding to meet its pension obligations to current and future retirees. The company also said that beginning Jan. 1, it would suspend all matching contributions to the company's 401(k) plan. Additionally, the company said that employees in most of Motorola's markets would not be getting any salary increases in 2009 and that it is co-CEOs, Greg Brown and Sanjay Jha, would take a voluntary 25 percent cut in their base salaries.
The Schaumburg, Ill.-based Motorola has struggled in recent months as demand has declined amid the economic downturn and its losses have mounted. The company posted a $397 million loss for the third quarter and cut 3,000 jobs. Its debt was recently downgraded to junk status by the ratings agency Standard & Poor's, putting the company in an even more precarious financial position.
Motorola has decided not to spin off its handset division and has instead said it will put renewed focus into creating Windows Mobile and Android-based handsets in 2009. Leaked photos of four new phones the company is said to be developing for Verizon Wireless appeared on the blog Boy Genius Report today.
For more:
- see this article
- see this release
- see this photo slideshow of the phones
- see this post on the phones
Related Articles:
Motorola's losses grow; firm will focus on Android, WinMo
Motorola restructures--again
Comments
Posted by Willie | December 17, 2008 - 2:50pm
Who wants to work at Motorola? No pensions, no 401K contributions, no 2009 salary increases. If they can't attract people, how will they make stuff? Maybe they don't want talented people anymore.
Their press release announces the cuts because of “continuing global economic challenges.” But, there is no mention about the years of mismanagement, especially at Devices, which is sinking the ship. Motorola’s management is a case study in mismanagement.
You know things are bad at MOT, when they can’t even use plain, proper English in their press release dated December 17, 2008. Check out this bureaucratic split infinitive: “Effective March 1, 2009, to better align with industry norms…” That’s a D minus in seventh grade English class.
Will Mr. Jha still get his $30 million in 2010? By now, he has to be wondering why he left Qualcomm. The lure of unearned riches?
Who runs the place anyhow? Twin CEOs… what a novel idea. How does that work?
It is a sad day for a once great company. A tragedy really.
Posted by Anonymous | December 17, 2008 - 4:57pm
MOT rewarded their non-management staff with an incentive bonus. You had to write and sign a formal a 'Personal Commitment' with smart objectives and detail how you exceeded the Commitment at the end of each year. If MOT was profitable then a bonus was granted. Perhaps the current MOT EXECs need to ONLY receive compensation and exit compensation when the profits exceed an established per cent. MOT has managed for several years reducing the salaries and benefits of the non-management staff as well as outsourcing their supply chain and manufacturing. At the same time, executive and upper management salary and bonus compensation have not experienced major reductions. Their plan of action is to cut staff everytime MOT cannot meet the Wall Street forecast. Many of the MOT former employees will not reconsider returning. MOTs talent has been leaving for over 10 years.
Posted by Ex-MOT | May 5, 2009 - 2:47pm
I would have to be pretty damn hungry before I returned to MOT. I was laid off after taking too long to save the company 40 million dollars. I'll never do that for MOTwipe again
Posted by Anonymous | June 2, 2009 - 7:59pm
Days after this announcement Greg Brown received 378,000 FREE shares of stock. I'll take that kind of a "paycut"
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