Nortel no get it....

Dear Congressman,

It appears that the same disease that has infected banks and investment houses has become pandemic and spread to other companies and countries. I speak of our frosty friends just over the northern border, Canada. I present the following article from the Dallas Business Journal on this topic:

Troubled telecom-equipment maker aims to give 92 senior executives reasons to stay; CEO not part of plan

At almost the same time it announced a 3,200-position staff cut last week, a unit of Nortel Networks Corp. filed documents in Delaware bankruptcy court seeking permission to pay out as much as $45 million in incentives and bonuses for executives and other key employees.

All told, about 5.1% of eligible employees of Nortel were selected to participate, court records say. Nortel employs about 30,000 people worldwide.

Nortel, which says the payouts are necessary to keep key talent aboard amid “flagging morale” as the equipment maker cuts jobs, declines to reveal the names or locations of the employees who would benefit from the two plans.

For its part, Nortel defends spending on executives and key employees as a necessary step to help the troubled firm emerge from bankrutpcy. Company officials maintain that these executives and employees could be lured away by competitors without strong financial incentives to stay.


This is a part of business that I think I will never understand. Nortel has managed to burn through more cash then a debutante in Bloomingdales with daddy's credit card, and had to file bankruptcy in early January. I will grant that being a telecom equipment provider in today's environment is a tough sell, but losing $5.8Billion in 2008 is quite a feat for any organization. With 30,000 employees, that works out to a $193,000 loss per employee.

And they want permission from the bankruptcy court to pay $45 million in bonuses? And "flagging morale"? How is it going to help the morale of the 94.9% of employees who are not included in this bonus plan who actually do all the work at Nortel? Seems to me the only people whose morale will be helped will be the same management team that is directly responsible for losing $5.8 billion.

Note to the Nortel Executive Team: You do not need to give these bonuses to retain key personnel, because the key personnel had already left the company when they realized you were running it in a way that was producing a loss equivalent to the GNP of a small nation. If you give bonuses to the remaining members who assisted you in this debacle, you are basically rewarding failure. All of your talented employees have already been lured by your competitors, courtesy of the inept way you have run the company.

So save your money. In fact, I would recommend using it to reinforce the doors and windows of your headquarters and getting better security for the next shareholder's meeting, because their are going to be plenty of angry fund managers and individual shareholders showing up with their torches and pitchforks looking for your heads.

So, want to buy a phone, eh?.....