Mike Z.’s Bad News E-Mail

By Mark Evans | Published: February 25, 2009

Here’s the e-mail that Mike Zafirovski sent to Nortel employees earlier today:

We announced some tough but important decisions today – decisions that will significantly impact many of you. In a press release just issued, we announced the reduction of an additional 3,200 positions. This is in addition to the reduction of roughly 1,800 positions still to be completed from previously announced plans. For those of you in North America being notified in the coming months, you may file your claims as unsecured creditors.

This obligation is real, but due to our financial condition and present situation, we are unable to fulfill this commitment to you. I am committed to maximizing any potential payout for impacted employees, which ultimately depends on how successful the restructuring plan will be. At 12:00 p.m. EST, I’ll address you in a global GIS session (details below). You deserve as much clarity as possible, as soon as possible.

Joining me on the GIS will be Pavi Binning, our CFO, and Elena King, SVP of Human Resources. Pavi will walk you through the restructuring process we are in and where we stand today. Elena will be there to cover some of the specific issues around the upcoming reductions. Please join us. Our company is in a difficult situation. The harshness of the economic reality and lowered spend profile of our customers, combined with the worries associated with our filing are directly impacting our revenues.

We must act quickly to adjust our costs to the realities of our industry and of our business. First, to achieve this, we cancelled equity-based compensation programs and determined there would be no 2008 bonuses under the Nortel Annual Incentive Plan (AIP) – decisions which impact eligible employees, including all executives: Bonuses under AIP for 2008 will not be paid. Nortel is seeking Canadian court approval to terminate its equity compensation plans, including all outstanding equity under the plans (including stock options, stock appreciation rights, restricted stock units and performance stock units), whether vested or unvested, and no equity will be awarded in 2009. Second, in addition to these actions, the Board also approved other employee programs to help meet our business objectives.

These programs follow best practices for companies undergoing restructuring and aim to help us emerge as a more focused and competitive company. We have decided to keep the AIP in place for 2009. With one change – calculations and payouts will be made quarterly instead of once a year. In addition, after 45 days of employment in any given quarter, you are eligible for the full AIP for that quarter if your employment is terminated before the end of the quarter. Initially, these payments are based on revenue, cash and customer-oriented operational metrics of lead time, outage recovery, and service responsiveness. This is a step forward and recognizes the immense task ahead, and the important role that all our people play in driving results.

This will provide a more immediate incentive for employees. We will also seek to implement, with court approval where required, some incentive and retention plans for a number of employees at various levels that are critical to our ability to restructure the company while under creditor protection. This is a typical practice for companies undergoing restructurings of this nature. I know many of you are asking for more detail on the components of the overall comprehensive restructuring plan and what the timetable is for its communication. You are eager to understand what kind of company we will be going forward – what businesses and marketplaces we will be in – what our investment strategies will be – and so on.

It is my hope that in today’s GIS, Pavi, Elena and I will be able to at least shed more light on the timetable and process. What is not changing is our deep commitment to our customers and our efforts to stabilize the business. We must continue to serve our customers well if we are to realize long-term success. I can tell you after meetings and conversations that our customers are supportive of us for now, but we have to continue performing and emerge from protection quickly if we are to secure their business for the future.

We are making the tough decisions we must to restructure Nortel and work to successfully emerge from creditor protection. We are making progress toward that objective every day.

Thank you for all you are doing for Nortel. Mike

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Got_Out_Years_Ago

I am constantly amazed by the optimism that Nortel continues to display as they continue to disappear from the global telecom and technology landscape. The thought leadership they once displayed in the space is massively deteriorating by the second. Where are the really large Wireless LTE deals?
http://www.unstrung.com/document.asp?doc_id=172…
What about the enterprise business? Dumping the L4-L7 Alteon swtiching business to Radware:
http://www.thestreet.com/_yahoo/story/10465197/…
But we now have a new ex-HP exec now at NT speaking about the possibility of a new application aware Routing platform?
http://seekingalpha.com/article/120616-new-rout…
If you understand the technology business from a customer perspective, all of this is very confusing for any long term trust of this once great company. The treatment of laid off employees is absolutely frightening in concept
Hotwheeler1

I supposed absence of Alepian at the GIS meaning he's been fired.
What are you doing here Ronald ?.. You suppose to don a yellow strip suit and show up at work today !.
rfc1149

However Alexander III of Macedon did largely conquer the world. And he had a huge effect on making the world the world we know today (the whole 'Hellenistic period'). Even the dying at 33 would not be unreasonable for a person (particularly any politically active one) in that day.

Mike of Macedon on the other hand didn't even change one company.
GrimReaper

Hey Moose, You might want to be careful posting gay-bashing comments. Some of your spineless buddies might be offended (you started it) BTW, what do you do with the moose when you catch it? That is scary to think of…..
tryn2makealivin

Rimraper we are all behind ya pal…
ArcAngelMessenger

I agree with scalpcutter. GrimReaper must of been one of those in the first rounds of cuts, 8 years ago. Your power point skills must have been lacking. Lets go with your theory that all NT'ers are just lazy bums. Who retained these “losers”? Without good leadership, no matter if its a business, sports team, or even a family unit they will fail.
ERworker

Wow….laid off in 2002 and still this angry??? Sounds like you need a lot more help than us poor, lazy, worthless Nortel workers. I'd be willing to bet you took the same anger management classes that our beloved JH did.

Truth? you can't handle the truth!
joremero

the flashlight joke was a good one
GrimReaper

Whatever helps you sleep at night Arc. Blame it on management as usual. You need a leader to get you to the unemployment line? Probably do. I guess you might need it since you NTers don't deserve sev. pay. haha.
rfc1149

MikeZ's conscious won't bother him. He believes he did a good job (and consequently deserves every penny he receives (and more)). If it wasn't for that stupid economy…

This seems to be a deep seeded part of the psyche of many executives. Everything 'good' is their doing (market goes up 20%, their company's stock 15% – they did a 'good' job). Everything bad is 'the economy/market/etc' I remember hearing this foolish from Nortel execs long before MikeZ et al.
joremero

You are right. But it's a good thing you are in great shape and capable of doing any work you want. Too bad McD doesn't need fit employees.
http://nortelinsider.wordpress.com/ Desk Jockey

Higher quality version (sorry for the poor text)
GrimReaper

I have a nice job and now I can't wait for all of the rest of you bums to get the axe. How does it feel? Scared little wifey and kids will have to beg for a can of beans on the streets? I'll throw 'em a bean or two as I drive by on the way to work!
scalpcutter

The reaper knows.
He is a walmart greeter.
After being nice all day he has to lose it at night.
GrimReaper

Too bad the work force doesn't need powerpoint experts who do nothing but make chart after chart. Then when they go to their meetings they only use one out of a hundred. Get used to saying 'you want fries with that'? haha..
scalpcutter

yep. Elgin street courthouse.
janitor duty.
but hey it's a job.
scalpcutter

Unenmployment line?
Well that's your problem.
I am going straight to the welfare line.
Maybe I'll see you at the courthouse?
scalpcutter

lol
GrimReaper

It's depressing to see all those ex-NT folks coming in to the WMart buying clothes that they never used to buy. Humbling to see it all, but I try to cheer them up!
scalpcutter

Yes canadians for the most part are naive, gullible, tolerant ***holes except the members of the military and hockey players.
GrimReaper

haha. probably. I'll be guy handing out cans of beans to Nortel ex's as part of my charity work.
scalpcutter

They should hand out crack bongs to the masses and have michael phelps give lessons for free.
Hotwheeler1

I don't think the Turkish people are that stupid to miss dinners and stayed to listen to Z's nonsense.

They are using the advanced version of Web.Alive..you can inserted clapping sounds along with the avatars.
sca41335

reports are that applause was from only a portion of those in attendance, and those sitting near the podium. Likely they amplified the sound to make it seem more comprehensive than it was.
http://nortelinsider.wordpress.com/ Desk Jockey

I did misunderstand you and for that I apologize, my mistake. You are a decent person for showing empathy towards others.

I get your point as well. To most people bearing the burden and responsibility for Nortel's situation would be quite the stressful situation. But that assumes that you have empathy for others.

Mike Z and the BoD have shown no empathy for others.
Another_Nortel_Watcher

GrimReaper is a known troll with many aliases and it is believed based on his postings that he was terminated from Nortel for performance reasons. Lower quadrant stuff. He uses these threads to try to make himself feel like more of a man on the back of others misfortunes. A real prize. All of the affected Nortel people should take some solace in the knowledge that life could be far far worse – you could be him.
Anonymous

sorry ?
broadbandbill

DJ,

You have missed your calling, too…–bb
GrimReaper

“Lower Quadrant”? Spoken like a Nortel clone. I doubt that the affected folks will be worrying about what I think while they are worrying about feeding the wife and kids. It's coming and I can hardly wait for you pathetic shells of humans to be drug out of your “cubes” screaming and kicking. Your NT umbrella will not be there for very much longer, losers. How does that make you feel, scared little boys and girls? hahahaha.
broadbandbill

I am almost positive that this subject has had the most responses so far and almost exclusively extremely negative towards management (sorry GrimReaper, but you are the lone minority). That is not counting the numerous readers that are probably agreeing with the posts. No better metric and reflection of what has happened to Nortel, thank you Mark…–bb
Another_Nortel_Watcher

These videos are really great stuff!!! Keep it up!
McBeese

Mark – there is a national media story here. The outpouring of emotion and frustration in your blog is incredible. The creativity of the Nortel ‘Hitler’ videos is impressive and fitting. You MUST get this forum the national and international visibility it deserves. It is now or never. Get in contact with the major media outlets in Nortel’s home markets (Ottawa, Toronto, Calgary, Raleigh, Dallas) and make them aware that this is going on. This is gold for a good business and/or community interest reporter. And it won’t hurt your blog either.
Another_Nortel_Watcher

These people leaving Nortel will be your bosses before long, so you better smarten up.

Btw… how many Nortel 'VPs' have you interviewed this week? LMAO at you!
Theleftbehind

were you Raped by Joel and you thought you had a relationship and he never called you back? is that why you are so angry an the NT employees?
sca41335

now, now grim, I know you must still be angry after missing out on the position of Frank Dunn's golf shoes cleaner. By the way what toy do you get in a happy meal now? in your role you must get access to the whole set.
GrimReaper

Yeah, right. Too bad I already know how to use powerpoint, so there is no need for any NT managers where I work. Of course aren't you ALL managers over there, just layer upon layer?
McBeese

Mark – I tried to post this once before but it seemed to get lost by the system. My apologies if it shows up twice (and if so, please delete one of them).

The outpouring of emotion and frustration in your blog has reached national interest level. The creativity of the Nortel ‘Hitler’ videos is impressive. The unanimous voice of so many contributors is a very notable point.

Please get this the national visibility it deserves. Contact the major media outlets in Nortel’s home markets (Ottawa, Toronto, Calgary, Raleigh, Dallas) and get this story out there. This is gold for business and community interest reporters. It won’t hurt your blog either.
GrimReaper

Too bad you won't be able to afford even a Happy Meal after getting the axe! I'll come by with a can or two of beans to give to your wife when she is cleaning out the new / used trailor you will be living in.
I cannot wait till you lose your house and you have to declare bankruptcy and go on welfare. What a humbling experience you and your loser co-workers are going to go thru.hahaha
sca41335

You must have been on the same anger management class as JH after the incident – are you two friends now?
Another_Nortel_Watcher

How would you feel if you were let go from a company for poor performance and that company was a laughing stock? What does that say about your abilities? “The lowest of the low.” That is the cross that GrimReaper must bear. It does not excuse his behavior in this blog but it certainly sheds some light.
HeadsZWinsTailsYouLose

The jet remark at the end cracked me up
HeadsZWinsTailsYouLose

GrimReaper reminds me of a 16 yr old frustrated kid who annoys other people to get attention. Don't worry Grim, I'm sure someone out there loves you!
OzNortel

Why is it that in every photo or video that Zman appears in lately he looks like he has soiled his pants? I suspect the pressure of failing to meet his idols great empire (Alexander) and look more like Hitlers crumbling 3rd Reich is taking its toil on him.

Now I know he gets a nice pay packet , but these guys want more than money. They want the cudos of a super CEO, to be idolised much like a rock star.

Zmans legacy is one of incompetance. I dont know him personaly so I cant say if he is a good or bad guy, but CEO material he is not and the sooner he is removed the better for Nortel….although at this point its hard to see Nortel ever becoming the company it once was
exnt_x_2

“I'm serious here, what does the average person do when there is no abundance of reasonable employment opportunities out there today?
Do we get the pink slip and head over to the Unemployment line, and then to the soup kitchen/bread line?”

Well, yes, actually if you need to. What makes you think you're so entitled?
exnt_x_2

What a load of crap. You are owed nothing more than a goodbye.”
Thank you. I've been jumped all over by a couple of people (not here) when I said the same thing. The sense of entitlement that goes along with everything Nortel is astonishing. For those bitching about Mike and others KEIP and salary and bonuses, go look in a mirror.
The psychiatrist

I understand your frustration, but honestly what did you expect him to say beyond an honest and direct answer?

It's not what anyone would expect him to say,but if he had a certain quality about him he would forfeit his base pay for 2009 or agree to earn only $1 as a sign that he is willing to sympathize with the many who are going to be laid off without severance,after all he earned close to $20 million over the last two years all the while Nortel has accelerated its way to chapter 11 restructuring.

It is no secret that he and his group have made some poor decisions over the last few years and he can't reverse the damage that was caused by them,but he could show that he is willing to pay a serious price by not taking his usual salary and I'm not talking about some questionable bonus money but his actual expected salary for 2009,after all he has earned enough over the last two years that would still enable him to live much more lavishly than those Nortel employees that will be lucky enough to keep their jobs through this restructuring period.
The_Real_Z

All I can say is I give up. There is no reason for us employees to stay employed but hard to give up a job and money. For the past year or so we only stayed so we could get a few month package/vacation. Without that there is no reason for us to work our butts off and give it our all. Mike Z is delusional constantly asking his employees for more and more but not doing the same from himself and his management team. What he does not understand is that the ones still around have been giving their all for the past 8 years and we are burned out.

Nortel is screwed from front line managers all the way to the top. I can share countless stories of messed up management culture. Everyone is too scared to stand up and do what is right. Everyone is afraid of getting let go if they don't follow orders. Anyone who does stand up is first on the list for layoffs. I can not tell you how many times I have called the ethics hotline or sent anonymous emails to them only to have them demand I reveal my name to them. I refused and I assume they refused to address the unethical issues too because nothing ever got resolved. I gave up on “ethical” Nortel push after the Happy Slapping Hackney incident.

Nortel will go down in history and be studied in all MBA classes of how not to run a business. Nortel could have been restored but for the past 8 years they have done nothing to improve products, support and engineering. Now it's too late and the best thing for Nortel to do is sell off everything and the last division standing will keep the Nortel name. Personally I think the avatar division will be the last one standing.

It is sad what these managers have done to their employees and this company. The jack@$$es could not even run a popsicle stand.

Nortel died once the management decided to off shore everything and cut corners on products. But yet they spent like crazy on stupid crap and forgot what their Core business was. Good Products and support = Sales. Buggy products and offshoring everything = Chap 7. Center of Excellence may @$$.

Now the big decision is do I go down the toilet with Nortel or bail?
The_Real_Z

Meant to say Center of Excellence my @$$.
Not2happy

if the big Mike Z resigns then Nortel might be able to pay out to severance with the money it would save on his big salary.
the quartly bonus mmmmmmmmm is this just a way of paying out to the exec's each Q and still screw the actual workforce??
Paycheck

Didn't you mean Center of Economy!!

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