And the Bonuses Keep on Coming

By Mark Evans | Published: February 14, 2010

Earlier this week, Nortel provided an update about its bankruptcy protection process, which has now been underway for more than a year.

Despite the sale of most of its major assets, Nortel is asking for court approval for an incentive plan for the next two years for 1,475 employees working for two units; Nortel Business Services and Corporate Services. The details are available with the 37th report of the Monitor.

The Nortel Special Incentive Plan will cost about $93-million, and will essentially be a carrot to keep Nortel’s remaining employees from jumping ship. Keep in the mind, the global economy is not exactly chock-a-block with jobs so it’s like there are telecom supplier chomping at the bit to lure away Nortel’s employees who have already been fired or left for better pastures.

But wait, there’s more: Nortel is also asking for approval to set up a “discretionary pool” for another $20-million  that “will provide the Plan Participants with the appropriate incentives to remain with Nortel”. In other words, Nortel wants the ability to hand out even more bonuses to really keep certain employees, and add new employee to participate in the NSIP.

But wait, there’s even more: Nortel also wants to create a $3-million “Reserve Pool”.

The NSIP replaces the two existing bonus programs, the Key Executive Incentive Program and the Keep Employee Retention Program, which expire July 14, 2010 and June 30, 2010 respectively.

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  • horace_grimswold

    Attention minions: Nortel doesn't care about you:
    http://www.productivity501.com/your-employer-ow…

    Attention executives: excellent job installing WIIFM…country club members only:
    http://www.guidonps.com/blog/the-2018wiifm2019-…

  • protosphere

    Irony and bonuses on steroids with this company. Makes the banks look like choir boys.

    I remember Nortel encouraged shareholders to allow them to keep the bonuses from the largest fraud in Canadian history at a Kangaroo AGM should the vote have soured.

    Exorbitant pay practices and bonuses they refused to negotiate in ultimatum settlement to current day as they cut severances to pay creditors and sell patents last to pay themselves as long as they can… the slippery crooks as thousands of investors and employees suffer while loophole crooked management just keeps on fattening their bank accounts.

  • wasthere

    During these tough times laARGE

  • Zhacknightmare

    Just incase anyone forgets about one Nortel Exec given a bonus in the last round.

    Rewarded for being a disgrace: (from AAN)

    “”When CEO Mike Zafirovski was rebuilding Nortel’s senior management team last year, he wanted to attract high-quality people with strong character, which made sense given the accounting scandal that had engulfed the company in 2004 and 2005. So, what does Zafirovski do with Joel Hackney, senior v.p. of operations and quality, who admitted he was guilty of false imprisonment, assault on a female and communicating threats following a road rage incident in a parking lot after a basketball event last October in North Carolina?

    According to the criminal complaint filed against Hackney, he cut off Alicia Ogden in his Audi SUV. When she honked at him, he got out of his car and asked if she had a problem. “He then grabbed the left side of my face,” Ogden said in the affidavit. “I told him not to touch me and he responded that he’ll do what he wants.” (Source: The News Observer) So does Zafirovski keep Hackney, who has agreed to 50 hours of community service and written an apology to Ogden, or does he cut him loose?

    Prediction: Hackney gets a slap on the wrist but the incident gets brushed aside as a first-offender, he’s truly sorry, will-never-happen-again kind of thing. Either that or Hackney “resigns” with a nice package.”"

    Strangler is now at Avaya so won't get a bonus this time but the leech is a creditor for some bonus he thinks he's owed.

  • longgone

    pimps and their whores

  • The psychiatrist

    right to the very bitter end has it become overly apparent what has been the problem with management and their sense of self entitlement in the face of liquidation and an uninspiring economy.

    These morons just don't get it,they still believe to this day that their run of the mill job requirements are worthy of excessive bonuses.

    I gotta tip my hat to a shameless bunch.

  • less

    As I've mentioned before, a single payment of $4-5k would keep some former employees afloat for another 2-3 months, not just 2-3 weeks..

  • yes4aapl

    Now you know it.
    btw
    I was just a messenger.

  • 4merEmployee22

    The Bankruptcy Court Judge should be scrutinized!!! Hell! Does he really care???

    I wished ex-Nortel should picket in front of the Toronto City Court!

    it's on University Avenue near Dundas Subway Station.

    “MADE IN CANADA” HEIST!!!

  • exNTII

    this story is so old. move on.

  • less

    OT, but I've been watching the Olympics and again found myself invariably thinking about Nortel (=Canada, if you will) when I heard commentators repeat trivia like: “Canada is the only nation ever to have hosted two Olympic Games and not to have won a gold medal in either”.

    - Nortel did even better.

    Or Apolo Ohno's getting a silver medal after two Korean teammates/competitors crashed in front of him at the finish line. US' Celski finished third.

    - “Win” or “lose”, the top dogs at Nortel always get prizes.

    The father of the Georgian luger killed during training said that his son told him that the track was too dangerous. Nodar Kumaritashvili died during Friday practice when he lost control of his sled and slammed into a trackside steel pole at nearly 145 kilometers (90 mph).

    – And that blue jumpsuit he wore does have a vague Nortel sheen…

    The athlete's death cast a shadow over the Winter Games in Vancouver. Said Marietta Pogosian, a 32-year old teacher: “I can't understand how they could fail to avert it after having prepared for the Olympics for many years.” Concerns about the course had been raised for months.

    - Nortel, Nortel, Nortel

    “It’s a very rare situation,” Georg Hackl, the three-time Olympic champion and German coach, told the A.P. “But there’s some things that you can’t do anything about.”

    - Mike Z said as much too

  • horace_grimswold

    Nortel's hidden agenda is that it wants skeleton organizations kept around until the auctions are complete to maintain good auction prices. The buyers will get the impression that they are purchasing full, intact lines of business, rather than liquidated artifacts of a former telco giant. The executives receiving KEIP bonuses will eventually rewarded by either being shown the door (ironic?) post-acquisition or transferred to the acquirers as Hackney was.

    If debtholders' interests were taken seriously, there would be retention bonus buyback hooks so these monies would be repaid as executives are transferred or fired.

    A market analysis should have been done to determine whether executives such as Donald McKenna could jump somewhere else and earn a $400,000.00 bonus in an economy with 10% unemployment.

    But with a fleet of executives that have created the biggest proverb since a ship collided with an iceberg in 1912, the bonuses are hard to justify.

  • bankrupt_bob

    Some of us will NEVER forgive, much less forget!

  • less

    So let the slideshow begin, hurry, hurry, step right on in…..

    http://www.itbusiness.ca/it/client/en/CDN/slide…

    CDN's Top 25 Newsmakers of 2009, Part One

    #1: Mike Zafirovski, Nortel Networks

    Once a Canadian technology giant and pioneer, in the end all the King’s horses and all the King’s men couldn’t put Nortel Networks back together again. Not even Mike Zafirovski.

    Zafirovski had gained a reputation as a turn-around specialist but, In the end, despite a talented and knowledgeable workforce, a world-class research team and a great portfolio of technology, the debt hole that previous bad decisions had dug for Nortel, coupled with the current economic downturn, left Zafirovski with few cards to play. And in 2009, play them he did.

    After six months under creditor protection, it became apparent a restructured Nortel wouldn’t emerge on the other side. The company would be auctioned for parts, with rivals such as Avaya and LM Ericsson coming out big winners. By the end of the year, Nortel was no more.

    While the process Zafirovski put in place would carry on throughout the year, he wouldn’t be around for much of it – Zafirovski announced his resignation in August.

    His shadow will loom large for some time, however, as the dismantling of the company he failed to save winds down and the impacts are considered. Could the company have been turned around? Could a leaner, meaner Nortel have emerged from creditor protection to preserve the legacy of a Canadian giant?

    For our top newsmaker of 2009, history’s judgment awaits.

    …can't afford to pass it by,
    guaranteed to make you cry.

    (lyrics and music by Blue (haha, Nortel blue, perhaps?) Magic)

  • free_agent

    Though the economy is down, the job market isn't entirely frozen, and of course, the best people are the ones that have the easiest time getting new jobs. If you want to maximize the value of the company, you don't want to “brightsize” it, where everyone who can get a job elsewhere does so.

    Of course, the Plan will be used to pass serious money to executives whose sole skill in being in a position to extract money from Nortel. But from the creditors' point of view, it's better to sign on to this sort of plan than to turn it down.

    In regard to “How would would feel if you were an employee …”, the answer is that it doesn't matter. The law specifically says that they're low down on the list to get money.

    If you really want to see things handled differently, lobby Parliament and Congress to change the bankruptcy laws. But until then, you should have known what the rules of the game were before you started playing it. “A pure heart and an empty head do not combine to form a Get Out Of Jail Free card.”

  • less

    Anyone starting their careers today whilst reading Nortel's rule book / code of ethics might well conclude that there none and its everyone for themselves, which is simply not true, and sets the stage for many more Nortels to repeat themselves.

    “Nortel” expects to raise another $1bil selling the rest of their junk, much of which will be needed to retain 'top talent” according to the sly and shrewd.

  • protosphere

    Nortel stole lives.

    Even as the devil dies in its wake of greed and ignorance defended by a genius of legal clout paid for by its spoils, it surfaces its ugly head to keep devouring what it can, while it can.

    This haven for fraud with a joke OSC and lax laws in Canada allow tyranny to fester.

    Everyone talks about profound change but no change is forthcoming at any rampant pace to any save future catastrophes I fear.

    It is a way of life here in Canada. Those that do it in the USA face quarter century sentences than going broke from legal fees, disgraced, and at most a short stint in Jail. Hardly a deterrent, and there will always be those who they hold close relationships to assist them in picking up the pieces. In the interim, those not at the crime scene are free to loot the corpse. Like what changed. Who holds the puppet strings?

    Our ex Liberal finance ministers, ex-Admirals, even our Chiefs in the military or Attorney Generals are not immune to facing this devil everyone condemns, talks about changing, like fighting a well armed soldier with a pea shooter.

    I am bitter towards the lack of action taken towards the moral majority's good intent. Perhaps if a fraction of the legal might was dedicated to fighting this devil than defending it we might be getting somewhere. Worse yet is trying to complain to the devil himself that runs the show accepting anything that can not be proven or reiterated as a template with the benefit of doubt neglecting overwhelming circumstantial evidence. If the devil doesn't speak, the devil doesn't burn it seems. As Nortel collects… more bonuses…. of course. This never shocked any Toronto business lawyer, thery just laughed and shrugged it off, accepting everyone knowing of Nortel's exorbitant pay practices. Even after folding. Even if it took stealing severances, after already stealing so many lives, for bonuses they even fought to keep.

  • Pingback: What’s Nortel Business Services?

  • less

    I hear Toyota is hiring….

    Like Nortel before them, Toyota's reputation just took a considerable hit, and its going to get worse (before its expected to get better) as scrutiny, and perhaps deeper scandal, intensifies.
    Imagine them hiring seasoned trunaround artists Dunn and Z to restate earnings and errant turnings, steering the company back to number one. Mutually restore some street cred, as it were…

  • bankrupt_bob

    Maybe they can drag this on until 2014… it would be fitting to end it all on the 100th birthday of the company.

  • yes4aapl

    The Nortel Special Incentive Plan will cost about $93-million,
    ====
    re
    I would say that Nortel's fraud continues.
    Look at the big picture
    Where is the money coming from?
    Is it from the company profits?
    Oh no! Nortel owns money to EDC. How much? $1 bill?
    Gov will use/lose money to pay unemployed NT employees as Nortel denied severance payments.
    Gov will use/lose money to pay pensions and LTD as Nortel makes $3 bill deficit in Pension Plan.
    At the same time crooks at Nortel are shamelessly demanding more $$ for their pockets! More bonuses in BK proceedings!

  • free_agent

    Perhaps I'm misunderstanding you, but in what way is it not true that “it[']s everyone for themselves”? Do you mean that loyalty and selfless laboring for the common good will be rewarded? As far as I can tell, in the modern world one's career is longer than the lifetime of whole industries, not to mention companies, and companies have no ability to reward employee loyalty even if they wanted to. (In particular, while the intensity of Nortel's problems are self-inflicted, the entire telecom manufacturing industry is going through a wringer, and there's no reason to expect the good times to return.)

  • less

    I don't Believe to the extent that loyalty and selfless laboring for the common good will always be rewarded, and to everyone's mutual satisfaction.

    Near the end, I sat faithlessly in my NT cube looking for knowledge to take with me, but those free online LAN/WAN courses Nortel once offered had all disappeared. I scavenged for what I hoped would be useful how-tos. Zip.
    Ah, I shoulda grabbed them while I had the chance and tried to turn them into a profit for me.

    Every job I've ever accepted, before or since, I take that leap of faith that, as long as there was adequate give and take, things can and will work out for the best. I'm only borrowing it from my successor, so if I hose the job and company, the company can and will take it out on the next guy (who is only out to grab a few creds and move on).

  • less

    Yet another headline that reminds me of Nortel

    http://i2.cdn.turner.com/cnn/2010/images/02/18/…

    Texas plane crash pilot: 'I have just had enough'

    “If you're reading this, you're no doubt asking yourself, 'Why did this have to happen?' ” the message says. “The simple truth is that it is complicated and has been coming for a long time.”
    “I saw it written once that the definition of insanity is repeating the same process over and over and expecting the outcome to suddenly be different,” the online message says.
    In the online message, the writer notes how during past times of crisis, like during the Great Depression, some of the wealthy who lost everything were known to have killed themselves.
    “Now, when the wealthy f— up, the poor get to die for the mistakes … isn't that a clever, tidy solution,” the letter states.

  • exNTII

    maybe they should hire mickey z. he will put in a six sigma, own it and yes program which they badly need. the ge man can teach Mr Toyoda kaizen all over again.

    both can commit harakiri when Toyota is in the toilet.

  • exNTII

    Nortel in comparison took its right angle turn and slammed into a pole. but then it died a slow painful death with every bone in the corporate body broken with the doctors (z & co) not knowing what to do.

  • less

    Yet another headline that reminds me of Nortel

    http://www.nydailynews.com/news/national/2010/0…

    Texas plane crash pilot: 'I have just had enough'

    If you're reading this, you're no doubt asking yourself, 'Why did this have to happen?' The simple truth is that it is complicated and has been coming for a long time.

    I saw it written once that the definition of insanity is repeating the same process over and over and expecting the outcome to suddenly be different

    during the Great Depression, some of the wealthy who lost everything were known to have killed themselves. Now, when the wealthy f— up, the poor get to die for the mistakes … isn't that a clever, tidy solution

  • exNTII

    maybe they should hire mickey z. he will put in a six sigma, own it and yes program which they badly need. the ge man can teach Mr Toyoda kaizen all over again. z might get his taxi jet back for home over the weekend flights between tokyo and chicago.

    both can commit harakiri when Toyota is in the toilet.

  • exNTII

    Nortel in comparison took its right angle turn and slammed into a pole. but then it died a slow painful death with every bone in the corporate body broken with the doctors (z & co) not knowing what to do.

  • perspective2

    Public and private organizations are into a phase of creative disassembly where constant reinvention and adjustments are constant. Hundreds of thousands of jobs are being shed by Chevron, NUMI, Wells Fargo Bank, HP, Starbucks etc. and the state, counties and cities. Even solid world class institutions like the University of California Berkeley under the leadership of Chancellor Birgeneau & Provost Breslauer are firing staff, faculty and part-time lecturers. Estimates are that the State of California may jettison 47,000 positions.
    Yet many employees, professionals and faculty cling to old assumptions about one of the most critical relationship of all: the implied, unwritten contract between employer and employee.
    Until recently, loyalty was the cornerstone of that relationship. Employers promised job security and a steady progress up the hierarchy in return for employees’s fitting in, performing in prescribed ways and sticking around. Longevity was a sign of employeer-employee relations; turnover was a sign of dysfunction. None of these assumptions apply today. Organizations can no longer guarantee employment and lifetime careers, even if they want to.
    Organizations that paralyzed themselves with an attachment to “success brings success’ rather than “success brings failure’ are now forced to break the implied contract with employees – a contract nurtured by management that the future can be controlled.
    Jettisoned employees are finding that the hard won knowledge, skills and capabilities earned while being loyal are no longer valuable in the employment market place.
    What kind of a contract can employers and employees make with each other? The central idea is both simple and powerful: the job or position is a shared situation. Employers and employees face market and financial conditions together, and the longevity of the partnership depends on how well the for-profit or not-for-profit continues to meet the needs of customers and constituencies. Neither employer nor employee has a future obligation to the other. Organizations train people. Employees develop the kind of security they really need – skills, knowledge and capabilities that enhance future employability.
    The partnership can be dissolved without either party considering the other a traitor. Faculty and staff loyalty at Cal is dead – get used to it.

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