Courts in the United States and Canada granted eight top Nortel Networks executives $7.3 million in retention bonuses, even as employees at the bankrupt company were forced to decide between severance pay and their pension plans.
Earlier this month, a U.S. court overseeing Nortel's bankruptcy allowed the company to pay $22 million in bonuses the company said it needed to keep 880 employees worlwide. Nortel said that the new executive bonus payments do not include payments to CEO Mike Zafirovski. The company did not say whether Zafirovski will receive some form of alternative compensation.
Ontario Superior Court Judge Geoffrey Morawetz approved the new executive bonuses despite vociferous protests from a lawyer representing a group of Nortel workers who have been fired but have not received severance pay. Nortel has offered to give fired employees early access to pension plans and provide medical benefits to retirees under the condition that they drop their claims for severance pay in bankruptcy court.
The telecom equipment giant filed for bankruptcy protection in mid-January and has until May to restructure. The company posted a $2.14 billion loss in the fourth quarter and a $5.8 billion loss for all of 2008. Its revenue declined 15 percent year-over-year in the fourth quarter, down to $2.72 billion. It has also been reported that Nortel may offload some of its major units, including its wireless equipment business, instead of trying to remain a whole company.
- see this article on the bonuses
- see this article on employees
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