Nortel cuts more staff, lowers compensation

Mired in restructuring due to bankruptcy, Nortel Networks Corp. has cut additional workforce and made changes to its employee compensation programs.
The beleaguered infrastructure company announced today that it is cutting 3,200 jobs and will discontinue giving bonuses in efforts to maximize stakeholder value and emerge as a more focused and competitive company.
In January, the Canadian giant filed for bankruptcy in Canada, United States and Europe to protect the company’s assets from creditors.
In a statement, Nortel CEO Mike Zafirovski said the decision to cut jobs is difficult but the current economic environment and its impact on revenue required the company to downsize its workforce.
“Tough decisions are being made to restructure the company and work towards a successful emergence from creditor protection,” he said.
The new reductions are incremental to the 1,800 remaining staff cuts from previously announced plans that still require completion.
Nortel officials could not provide any further details in what positions are being cut and in what divisions.
As for the compensation program, Nortel’s board of directors decided the company will not pay bonuses under the Nortel Annual Incentive Plan (AIP) for 2008. The company is seeking to terminate its equity-based compensation plans through the Canadian court system and no equity will be awarded this year.
Nortel will continue its AIP this year for full- and part-time employees that are eligible. The plan is being modified to award quarterly payouts rather than an annual award.
The company has until May 1 to come up with a restructuring plan because of the bankruptcy filing. Nortel officials are working with creditors and other parties in an effort that will allow the company to regain its financial footing.
Nortel has yet to release its fourth-quarter results for 2008. The company has been on a downward spiral since it reported $3.4 billion in losses for the third quarter last fall.
The company has terminated its WiMAX business unit and its stock has been suspended from the New York Stock Exchange.