An Open Letter to Mike Z.

Heads they win. Tails you lose. Assuming you have a say in the coin toss, which is not the case.

Mike and The Board,

You need to act *immediately* to demonstrate to employees, creditors, the courts and the public that this is not another case of corporate greed. Look at John Chambers and Steve Jobs action in 2002:

http://news.cnet.com/Cisco-CEO-draws-1-salary/2100-1033_3-960745.html

This is why they are great leaders of successful companies. This is leadership by example.

MikeZ, I noticed your voluntary pension reduction in 2006 is approx the same dollar amount as my involuntary reduction, while your total comp was approx 100 times mine.

Board, I noticed Investors FAQ showing that you will be paid in cash during restructuring. Your $25K salary reduction shows the same thinking behind Mike’s pension reduction.

So many of Nortel's best and sharpest people, the largest *invisible* asset on Nortel's balance sheet, the people we need most if and when Nortel emerges from restructuring, continue to act daily to join those who have already determined that there is a better life for them outside Nortel. In Canada at least, we are finding opportunities even in this economy. Don't expect the recession to keep us at Nortel.

Give up the corporate jet, scale your compensation back to $1, give back what bonuses you can and lead by example.

The sooner you act, the better. Each day, you lose more of these invisible assets.

I'd say you have less than a week.

One of the best letters i have ever seen by anyone regarding Nortel.

Unfortunately the system is setup to protect the board of directors and senior management of any company. It is all part of the ponzi scheme that is the global economy. Heads they win, tails you lose.

Lean Six Sigma will show us the way.

I would like to add that we also believed when Steve Bandrowczak was brought into IT. When he redesigned the IT org to 2/3 of what it was and made everyone reinterview for a position, we believed it was for the best, despite the unlucky 1/3. A few heart attacks and the lowest ESAT ever were explained as an unintended consequence of the restructuring. I would like to tell the execs that employee pain DOES matter. There is a right way and a better way. They more than let us down.

Thank you Mark for posting a link to my article. I am amazed by the responses and humbled that so many would take time to read it. Never did I imagine so many would care for just a few words that had been kicking around in my head for some time.

As I've always said, AAN has and will always be a great resource.

I'll bet Mike's happy knowing his insurance is in place to cover accidents such the one his son was involved in Sept. 2008. Too bad many ex-Nortel employees now with no severance have to worry about where their insurance will come from. Shame on Mike Z.

"Bucknell student improving after bicycle accident

9/02/08

LEWISBURG – The Bucknell University student that was critically injured in a bicycle accident over the weekend has been upgraded to serious condition at Geisinger Medical Center. 21-year-old Kirk Zafirovski sustained a head injury in the Saturday evening crash.

His bike hit a tree on Loomis Street in Lewisburg. The Bucknell senior was taken to Evangelical Community Hospital and then transferred by Life Flight to Geisinger Medical Center. Police say he was not wearing a helmet at the time. (Sara Bartlett) "

http://www.wqkx.com/1070_WKOK/NEWS_ARCHIVES/090508.htm

I agree. This is not a cheap shot. When the hatchet befalls an employee, they no longer get the 60 days of benefits and a severance. There are people who do not have the money to pay upfront for Health Care. If you were laid off tomorrow and a child or spouse got sick, you'd be screwed for the rest of your life.
Mike Z is a cold hearted and does not care as you can read that he had the option of giving Serverance and 60 days notice as stated by E&Y. I feel sorry for the employees forced to remain with this scumbag because these days, jobs are not a dime a dozen..

Shame is on YOU NT to use what could be a family tragedy to take a cheap shot at Z. Hit the man, leave his family alone. Don’t you have any decency? …--bb

Not a cheap shot. Simply pointing out that his son lucky to have insurance and/or a millionaire father that can afford the doctor bills. Thousands of families are without both insurance and income at the moment because Mike Z *chose* to provide severance ... unless you're Hackney, Lowe, Carey, or the many other non-producing executives that have ruined Nortel. I stand by my post and am not ashamed of it.

I didn't see this as a cheap shot. Just stating how different strata in corporate society deal with day to day life expenses. If you haven't heard, health care is a huge issue down here in the states since its still primarily tied to employment. Its too bad everyone can't have the security of being covered for such unfortunate accidents during this time of higher unemployment.

NT & CO,

In a matter of life and death, it is a cheap shot and denial of the same does NOT change that!...--bb

You saying its a cheap shot doesn't make it so either. You are not the decider. Your analysis on Nortel is usually pretty good but on this it is quite weak. In this case you are misinterpreting the context of the post due some emotional reaction. As I said, its too bad we don't have a healthcare system that protects the average citizen against these kind of risks.

CO,

As a fan of your posts, this time it is you that is on the wrong side of this argument. I am not the ‘decider’; rather, it is common decency that decides!

One of the benefits of living in LALA land is that one does NOT go after the relatives of the celebs; not cool hunting! ..--bb

Who's going after relatives ? These are the mere facts. I personally think pointing out personal challenges and the differences between those at the top and everyone else is fair game. Mike Z is no celeb. To use a sports analogy, he is just a guy (i.e. he is nothing special).

Mike Z son’s almost tragic accident (details not yet clear) was used to make a point about Mike Z.

Cheap shot, low blow, sucker punch, take your pick. And let it go, you and NT showed bad taste (as did Mark Evans!)…--bb

Your in the minority here on this one. The point isn't about Mike Z. Its about health care for those at the top of Nortel versus the laid off employee (at least in the US) who is being stiffed out of his/her healthcare come February. Quit your hero worshipping of people like Mike Z. They aren't celebrities or anything special and thus don't deserve anything greater then the laid off employee who gets nothing.

CO,

Here worship? Dude, take a look at my posts; Mike Z has had no BIGGER critic of his public persona than yours truly (and I know the guy). None bigger, do your homework. Celebrity reference was an analogy, which you totally missed. And the majority is not always right; remember the USA 2004 Election? Let it go, pls…--bb

I totally agree with bbb. I found the original post malicious.

That’s the perfect word: malicious!, Thanks NE…--bb

I absolutely started to lose faith when the Hackney incident happened, He never went public was quoted as saying he was *over it* and had Mike apologize on his behalf. Right then I knew that these clowns and their Ethics training etc. were all about a front to look honest and ethical. I began to see that Mike said alot but never did much, he spoke of loyalty and hardwork but really had none.

I'm appalled that I still work for this company, I'm actively looking and know that if Nortel does survive, I DO NOT want to be part of the *new* Nortel. I've had enough.

Re: the *I believe * grass roots push, i think belief in Nortel employees is not lacking , we all believe that the majority of people who are employed at Nortel are hard working, eithical, go to the wall types. I also believe that Mike Z , Hackney, Flannigan, etc. are a bunch of leaders who need to have left 2 years ago, I honestly believe Nortel would be in a way better position!

http://www.erietube.com/_New-Edinboro-Dome/VIDEO/449077/3766.html

Construction continues on the \$5 million Mike S. Zafirovski Sports and Recreation Center at Edinboro University. The dome's fabric roof material, weighing 24 tons, was inflated Dec. 18, covering the 85,000 square-foot structure. When completed in the Spring of 2009, the facility will house a regulation running track and various sport courts for use by students and the Edinboro community.

DJ, great letter. As a current NT employee I think I can safely say we're all feeling the pain. But I suspect unless it has any legal ramifications for Mike Z he couldn't give a crap. He's in it for himself and will do what it takes to come out a winner. His latest salary increases and bonuses are pretty clear on that. Isn't that the American way though? At least that's probably what he learned from watching American TV in Macedonia. Now he's living the dream at everyone else's expense.

There appears to have been some very sharp practise going on amongst the senior officers of Nortel. Have they crossed the line to fraud I wonder, with the victims being the employees, pensioners and shareholders? Time will tell.
If the E&Y submission to the Canadian courts proves in time to be not entirely truthful, with the intent of obtaining undue protection from creditors to maximise personal gain, then the perpetrators should answer to the law.

Thinking along those same lines...

If you knowingly enter into a contract that you *know* you aren't going to honor, surely that is some form of fraud. Those people who signed the last severance agreements should go after some of the remaining cash.

In addition, all of those who are under a severance agreement that Nortel is now defaulting on are no longer obligated to honor their end of the deal either.

What obligations might one have under severance? Never been there....but very interested to know.

Typically, agreeing to a severance agreement means the payee agrees to not work for a competitor for some period of time, agrees to not speak badly of the company, and surrenders his/her right to pursue legal action against the company for a variety of reasons, including wrongful dismissal, discriminatory dismissal, etc..

To a large degree, it's anti-compete hush-money.

Why did (do?) so many keep on believing even when there were signs of problems? Was it fear, ignorance, both?

Over the years, those who supported management decisions (blindly or not) were regarded as the supporters. Those who tried to uncover the truth, find ways to redirect the business towards what the industry was calling for (not just fancy innovations but real business solutions) were considered to be naysayers. Unfortunately, the latter were usually the more experienced and knowledgeable employees, the very same employees who had their pensions restructured about a year ago and who were told that their dissatisfaction with the company wasn't normal so they should consider working somewhere else.

Dear Nortel Insider,

Thanks for writing what many of us have been thinking.

Since last week's announcement, I, among many, have gone from believing what Mike.Z. said about it being "Business as Usual" to sickening disbelief at what he has done to us.

He engaged Ernst&Young on the 26th September 2008, then on the 10th December, got his spokesman to deny that any bankruptcy filing was imminent, that we had sufficient liquidity for 12-18 months, as well as encourage us to spread this message with our customers and suppliers, then just a few weeks later he filed for Chapter11.

He knew that anyone who took a severance package at the end of 2008 would not actually get any severance money or a pension, and knew that those of us who were left at Nortel would get nothing either.

I just feel a growing sense of shame and disgust - shame that the Leader of this Company and his executive team could behave in such a cynical, unethical, immoral manner - and disgust at the way he could condemn thousands of people to such a sorry fate.

Shame on you, Mike.Z.

I was a part of Nortel for over 20 years, and it saddens me greatly to see this ending. The only consolation I can offer is that Mike Z. and his cohorts will indeed face their day of reckoning before their maker.

Well said, NortelGirl!

They really need to fire the Z-Man. He can line-up behind the creditors to try to get any severance. But the feeling of betrayal is so deep and widespread in the company, that I don't think the troop will rally under him, even if there is a reasonable plan for survival. The Z-Man must go!

I applaud the initiative to get the messages out there, and understand the catharsis that comes with venting like this, however, everyone has a slightly different take on the issues.

Personally, I think the Hackney incident has been overdone. It was bad, and reflected poorly on his character, but I don't think it has much relevance to the demise of Nortel and the unscrupulous actions of the last few weeks.

One of the biggest issues here is that Nortel is attempting to get on a "firm financial footing" by taking advantage of recently laid off employees and those to be soon laid off. I might still be behind the leadership if it wasn't for telling all employees that they will receive no notice and no severance and that thousands are due to be axed over the next few weeks. These are our friends and colleagues and those who remain with the company after the “restructuring” will have to live with that shame. It's a horrific environment to be working in, and most people are terrified of the prospect of getting the HR phone call. Furthermore, getting back on track financially by not paying the money owed to 40,000 groups and individuals is just not morally right, particularly when the CEO is still raking in a massive, exorbitant salary.

The other issues in this open letter are fair. Nortel is in this predicament because of really poor decisions by the leadership; imposing cost cuttings and huge process overheads at the wrong time at the expense of creativity and innovation.

Hackney incident is as relevant as breaking the non-compete agreement that Nortel had to pay 11M for. These are example when actions give you a better idea of the character than any words ever could!

I too think the Hackney incident was a watershed. Mostly because it coincided with the big push for ethical behaviours both inside the corporation and out. The obvious double standard put the newly hired Chief Ethics Officer in a very difficult position and undermined employee morale.

Many:

Exactly! There was a big push for ethics by the time of the incident and fire the thug's arse over it was the only possible move.
But Mr. Z provided a very very lousy excuse instead and it clearly demonstrated his lack of commitment to the company's interest and employee morale.

About Susan Shepard, that was exactly the reason why she resigned. She could not stay in a company with a "say-don't do" attitude. More info on her resignation here: http://www.sec.gov/Archives/edgar/data/72911/000090956706001779/o33732e8vk.htm.

Also, the old employees will recall this name: Megan Barry, ethics prime from 1994 to 1999. One of her statements made in 2005 clearly demonstrates that taking shortcuts in times of increased competition does not work:
"By the time she left [Megan], however, Nortel wasn't really a trailblazer in ethics anymore. When John Roth took over as CEO in 1997, her department grew increasingly invisible within the organization. "When the senior leadership changed, you definitely saw a de-emphasis of ethics," she says. "Roth's legacy is what Nortel has to deal with today.""

Eerie, huh? I don't think so.

Read the full article here: http://www.macleans.ca/article.jsp?content=20050124_98842_98842

John Roth sounded bullish on Nortel's future a decade ago:

http://www.youtube.com/watch?v=6cpdijMqooc

I totally agree. That event made the entire Ethics initiative a joke and an insult to the employee base. Especially when people looked at Hackney's compensation package. What on earth did he do to actually deserve it?

Adding injury to insult, not only did the Z-Man not fired Hackney. He promoted him to run the Enterprise BU. And the Enterprise business has deteriorated significantly since Hackney took over. Hackney promised great things and urged people to be decisive when he first took over. Yet, he sat on things for the longest time. This is a real crime that he had a whole year to fix things, but the Enterprise cabinet continued to be dysfunctional for a whole year before he finally cleaned house. This goes back to the "GE" mode of management where they want slooow changes even though they know full well that something is really wrong and a train wreck was about to happen.

I think the Hackney incident is highly relevant because it was one of the first clear examples of Mike Z's lack of leadership judgement.

One more thing I would add to this letter where I think fraud was commited by Mike Z:

Knowing that nortel was entering bankruptcy protection, his top management got the golden parachute (CTO, CMO, etc were given lumpsums as they were canadian employees). This was the first time when top management was let go with only 1300 layoffs and with bankruptcy on cards.

While Mike Z did come to reign, I wonder whether you mean "reins".

rien ne vas plus