U.S Trustee Balks at Bonuses

By Mark Evans | Published: March 2, 2010

It looks like the incentive bonuses that Nortel wants to give to its remaining employees over the next two years may turn into a battle.

According to BusinessWeek, acting U.S. Trustee Roberta DeAngelis is objecting to the $55.6 million of retention and incentive payments for 866 employees, describing them as “extraordinary”.

The payments are part of a bonus structure proposed by Nortel last month that could see as much as $92.4-million set aside for 1,475 employees. These employees are running Nortel’s government services and transition units.

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  • sleepingbeauty

    Thank goodness that this was stopped. Bonuses??? For what???

    Connie

  • protosphere

    Roth envy crooked bonuses that got them into this mess to begin with to these very same fraud bonuses they fought to keep at a kangaroo AGM, to even more bonuses paid for everything since diluting to keep good people to financial innovation to looting the corpse to name it… bonuses at Nortel were a profoundly astounding joke. Everyone knows this but about time some one did something about it albeit too little too late.

    http://www2.canada.com/ottawacitizen/news/obser…

    How executive pay incentives poisoned Nortel

    Nortel's top executives took home $400 million, even as they laid the groundwork for the company's slide into bankruptcy protection,

    More than $365 billion share value has vanished,
    (plus tens of thousands of jobs etc… and they even cut severances /ultimatumed pensions)

    “Nortel changed from an engineering culture that favored innovation to one that exalted pay and bonuses,” says a former vice-president. “We never recovered.” The extent of Nortel Networks' fall from grace is shocking.

  • ExNortel66

    The $55.6 million works out to $63,510.39 per person for 866.
    The $92.4 million works out to $62,644.07 per person for 1475.

    …IF the bonus were divided equally between regular employees (maybe a couple of secretaries???) and the higher-ups. Yeah…sure……..

  • Nortel watcher

    wow, a corporate bankruptcy court official with a backbone…for a while there, it truly seemed like the gravy train couldn't be stopped…I'm sure E & Y will find a way to persuade the court just as they have all along

  • MikeZ_ElPresidente

    Never mind the bonuses , you should see all the junkets and “think tank” meetings being held , flying “execs” everywhere in never ending talk fests, where they waste $$$ and come out with zero results.

    The pigs have their faces in the trough

  • wasthere

    Nortel employees deserves no bonuses. They already got all kinds of bonuses fraudulently during all this downturn. Please

  • felixmk

    The folks left at Nortel are mainly the people who were not wanted by the acquirers and who could not get other jobs. They are not going anywhere, especially not in this economy and with the contraction in the telecom equipment industry. Give them the normal bonuses (5-35% of salary) *if they meet their targets*, just like Nortel paid out back in the good old days. No need for exceptional retention bonuses.

  • exNTII

    The Americans are the only ones with balls.

  • yes4aapl

    Give them the normal bonuses (5-35% of salary) *if they meet their targets*, just like Nortel paid out back in the good old days. No need for exceptional retention bonuses.

    ====
    re
    That is correct. No need for special and high bonuses as anyone who finds a new employer will quit anyway.
    Who would stay having offers from a good company? and why? just to get another bonus to stay on sinking ship?
    The reason for bonuses is laughable! but hey, Nortel tried that trick again. No shame!

  • horace_grimswold

    Extraordinary at most companies is extra ordinary at Nortel.

  • exNTII

    good way to put it. love it.

  • less

    $50 mio hardly covers 4-5 top execs where I once worked….

  • AcrimoniousAl

    And I bet the flying “execs” find away to continue to use Empire Level Luxury Suite 214 at the New York Mets games even though Queens BallPark Company LLC filed a claim for $6,898,294.20. See Claim 6709, Exhibit F, page 27

  • bankrupt_bob

    Pay them in company stock.

  • tainted_koolaid

    US Trustee Roberta DeAngelis, bravo!!! it's about time that someone brings some ethical and common sense to this nortel senior management bankruptcy gravy train! This round of bonuses was Joe Flanagan's final move to grab whatever dollars are left after he sucked every last penny he could out of nortel before resigning. Joe should have resigned from nortel when he realized he was in over his head, but give him credit, like MIke Z and Joel H, he was successful squeezing millions out of nortel before leaving. Ms DeAngelis, again thank you!!

  • henry100

    Excuse me but why is there grief on this when the money is NOT from Nortel's balance but from the buying companies (88% buyers, 12% Nortel)? Yeah, millions for execs no one is ever happy with. But if the money isn't from Nortel's funds why the big hoo ha? Many “regular folks” are being offered some extra money for sticking around for final work knowing their job is going away sometime in 2010 and 2011. Heck maybe this is why the Government did nothing since they get a hefty tax portion of these bonuses!

  • henry100

    Excuse me but why is there grief on this when the money is NOT from Nortel's balance but from the buying companies (88% buyers, 12% Nortel)? Yeah, millions for execs no one is ever happy with. But if the money isn't from Nortel's funds why the big hoo ha? Many “regular folks” are being offered some extra money for sticking around for final work knowing their job is going away sometime in 2010 and 2011. Heck maybe this is why the Government did nothing since they get a hefty tax portion of these bonuses!

  • techorama

    A couple of reasons; firstly, this is still 12% from Nortel i.e. about $10M, which is incidentally more than double what was offered to the Canadian severed employees to go away and shut up. This $10M isn't Nortel's money, it is money that should go to creditors and if the buying companies want to throw in $80M why should the creditor have to throw in another $10M of their money.

    Secondly, this was negotiated as part of the sell off- negotiated by the executives who are now getting the bonuses. Were they really working in the best interests of the creditors when one of the stipulations negotiated was that they throw in an extra $80M in bonuses for the employees once they make the purchase? Why was this even made an obligation on the part of the purchaser??

  • TongueInCheek

    Off-Topic: Wi-LAN and Mosaid both interested in Nortel Patents

    An interesting story from the Ottawa Citizen:

    http://www.ottawacitizen.com/news/Patent+firms+…

  • random123

    If I was buying a chunk of Nortel I'd want assurance that the back-office staff, who know they are losing their jobs in a year or two, will stay around to help the transition.

    Given that their pensions are screwed, their job prospects are screwed and their chances of pay rises etc in Nortel are screwed, they have to come up with SOMETHING to stop the best remaining backroom people leaving whilst being depended upon.

  • protosphere

    “Mosaid has a warchest of $100 million in cash after a successful recent securities offering. Wi-LAN had $96 million in cash at the end of December.”

    “most key patents have been licensed on long-term deals and some have been sold outright to companies buying Nortel operating lines.”

    ________________________________________

    not so off topic… hype and bone us go hand in hand
    … all thankfully coming to a close soon…

  • tainted_koolaid

    based on your response you must be one of the remaining few in line for a bonus. it's great that you're still employed and pulling a good paycheck with a full benefits package. for those ex-nortel people that spent 20, 30 years of commitment to nortel and were asked to leave with no severance, no benefits, having to pay exorbitant rates for Cobra health benefits, the millions going to bonuses could have a gone a small way to 'payback' these good people for decades of hard work. a bonus for not quitting for the next 18-24 months compared to decades of hardwork and dedication doesn't compare! and how about the good people on long term disability whose benefits dry up later this year, i'm sure the majority would rather be working with 'no bonus'! you're response shows you're just as greedy as flanagan, hackney, and the rest.

  • Nortelguy

    As a Prefered Creditor, I received my settlement last month from the administrators – $825 gross against $27,000 – about 3% of the amount owed.

    I truly hope these the Nortel execs receiving nothing more than than public humiliation for driving this great organisation into the ground.

    Crooked, incompetent thieves, the lot of them.

  • random123

    I've never worked for Nortel and, of course, never will.

    Our organisation uses Nortel gear. It's in our interest that the new company that supports that equipment doesn't lose the support the remaining Nortel folks are providing during the transition.

    I feel for you koolaid, but you are venting in the wrong direction.

  • InTheField

    We all know this is hush money, give little bonuses to the employees to justify the big bonuses to the execs. All this other money slinging is the result of gov't rules, courts, and regs, that's who we should be mad at, they are the ones who allowing this to continue. However, we employees did not benefit greatly from the fraud during the downturn. I went nine years without a raise, imagine that! The funniest (ok, saddest) thing is that Avaya got Hackney and appears to be retaining him. Having won an Ethical Company award in 2009, he should kill their chances for another in 2010!

  • exNTII

    wonder what a non preferred creditor would get. 0%

  • horace_grimswold

    US Trustee Roberta DeAngelis will quiet her yelling down once SHE gets HER bonus…all in crisp $50's and $100's.

  • wasthere

    I was there for more then 25 years with my last 7 or 8 years mostly frozen also. Still I did earned as much as I could get on similar job elswere when I was laid off, a little more then a year ago. As far as I am concerned, with the poor results that Nortel delivered in the last 8, 9 years, bonuses should have been frozen also . You can't wash completely the shareholders value , which are by the way the real owners of the company, and on the other end shower yourself with bonuses. I agree though, bonuses were allowed having in mind that the hotshots(the GEnius family) would get the biggest shunk of it !

  • wasthere

    Good news for creditors ! Ciena stock surges !

    http://quotes.stocknod.com/stocknod/?GUID=12177…

  • less

    Former Nortel execs key to Ciena reaching this milestone strongly recommend you roll your Balanced Retirement Plan into the far more rewarding Stock Purchase Plan, thus accelerating their provenTen Year Cycle of Own It! and stuff….

  • protosphere

    Looks pretty hum drum to me (trades same as it did half a decade ago) at around 16 bucks a share.

    http://www.google.ca/finance?client=ob&q=NASDAQ…

    5 year chart shows over $45 in 2007, over $35 in 2008, a high of around $16 in 2009, and trading at near that at $16.01 right now… (mind you during the market bottom last March it was trading around $6 but a lot were down then)

  • wasthere

    Yep I agree, it's not a new Eldorado but at least the 10 millions shares(or bonds convertible in shares) of Ciena that the creditors got in the optical division sale are worth more now then at the date's deal.

  • exNTII

    extended losses, downgrade but it surges. bizarre but the explanation is a the stock was probably shorted big time. when it went up they must have covered causing an artificial surge.

  • 4merEmployee22

    So? What will happen now after April 2010?

    Will NORTEL get another BP Extension???

    Will NORTEL get another BP Extension???

  • freqmgr

    I've heard a still serving Nortel PR person say that NT can have as many extensions as they need/want to have.

  • 4merEmployee22

    Doesn't CHAPTER 11 in USA has limitations?
    I don't know about the Canadian CCAA limitations?

    CCAA stands for Companies Creditors Arrangements Acts

    What they've succeded 'Arranging' were the BONUSES alright?

    So Sad?

  • freqmgr

    The PR person was quite certain in her response….as many extensions for as long as needed. Others in that meeting were amazed at that but she may have correct. Recently I saw her name as part of an announcement.

    Message powered by a Samsung Mobile device.

  • Wobbler

    To all the knockers without the open the facts
    I happen to be a back room staff memeber if I was not doing my job, i.e if I upt and left for a job offer tomorrow, the transistion and after service we have to provide to the divesting companies would fail, and guess what Nortel will have penalties, and guess what that means less money to pay to the people who rightly deserve the payment as in our ex employees and the vendors who we owe money to. Guess what else,sitting in an office where there was once 2000 people but now holds 5 is not an incentive to stay, the retention plan to keep us, which is not a full package (miss informed twits like some of the above seem to think millions are given to us all) covers maybe 4 months of money in turn for enabling roughly $2billion of divestiture. Without the staff remaining who are working 24 / 7 everyone else will get 2 3rds of 3 5ths of F*ck all. So stop moaning like bitches and think of the poor sods who have to sit in the dark awaiting the lightbulbs to run out of power in a office full of empty desks with more pressure to deliver than anyone else who was previously working for the giant of a company . I agree with Random123 without us, others will be up the creek, so get off your moral soap box its not executives only getting a lift up, I soon will be out the door no pension no redundancy and the only thing keeping me here is the money to see out the job. Call me what you will, Nortel has been good to me , i now owe them nothing so Im taking the money. We are essential for dismantling Nortel. Bitter or twisted your belief is miss guided. the cash is stopping Nada going your way or perhaps your clients way, if you have lost money on the stock markety buying Nortel shares, guess what its a gamble, only risk what you are prepared to lose. Must go I have a job to do, still.
    Rant over

  • Wobbler

    To all the knockers without the open the facts
    I happen to be a back room staff memeber if I was not doing my job, i.e if I upt and left for a job offer tomorrow, the transistion and after service we have to provide to the divesting companies would fail, and guess what Nortel will have penalties, and guess what that means less money to pay to the people who rightly deserve the payment as in our ex employees and the vendors who we owe money to. Guess what else,sitting in an office where there was once 2000 people but now holds 5 is not an incentive to stay, the retention plan to keep us, which is not a full package (miss informed twits like some of the above seem to think millions are given to us all) covers maybe 4 months of money in turn for enabling roughly $2billion of divestiture. Without the staff remaining who are working 24 / 7 everyone else will get 2 3rds of 3 5ths of F*ck all. So stop moaning like bitches and think of the poor sods who have to sit in the dark awaiting the lightbulbs to run out of power in a office full of empty desks with more pressure to deliver than anyone else who was previously working for the giant of a company . I agree with Random123 without us, others will be up the creek, so get off your moral soap box its not executives only getting a lift up, I soon will be out the door no pension no redundancy and the only thing keeping me here is the money to see out the job. Call me what you will, Nortel has been good to me , i now owe them nothing so Im taking the money. We are essential for dismantling Nortel. Bitter or twisted your belief is miss guided. the cash is stopping Nada going your way or perhaps your clients way, if you have lost money on the stock markety buying Nortel shares, guess what its a gamble, only risk what you are prepared to lose. Must go I have a job to do, still.
    Rant over

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