Richard Lowe “gets lucky” with “well-timed withdrawal”
I’ve been gone for a while, but this most recent article just sickened me even more: Nortel exec gets lucky with deferred income withdrawal From the news posting:
Richard Lowe, the top Nortel Networks executive responsible for carrier network operations, made a well-timed withdrawal of funds late last year from a deferred compensation fund that Nortel provides for high-income U.S. employees.
Nortel disclosed in its annual report earlier this year that he took out $1,701,043 U.S. less than two months before the bankruptcy filing of Jan. 14.
Meanwhile, other employees who weren’t so “lucky” and didn’t make a withdrawal prior to the Ch.11 filing were given the short end of the stick, being told this by HR:
Elena King, the senior vice-president for human resources, told him in a letter last month: “I regret to inform you that it’s become clear that there are no options: Under the terms of this plan, all non-qualified deferred compensation funds are part of the general assets of the company, and therefore are subject to claims by all company creditors.”
Yet another example of those at the top manipulating the system and the rules for their own personal gain. Let’s be real here, there is no such thing as luck. Mr. Lowe’s “well-timed withdrawal” was almost certainly the result of some sort of insider information, but unfortunately there will not be enough evidence to prove this in a court of law.
Meanwhile, hardworking and loyal employees who were kept in the dark and told to keep their heads down suffered from the consequences of a dysfunctional management and inept BoD.
Nortel Downfall Part 12
The Nortel Executive Management Team plans for the imminent turnaround of the company.
Nortel Executives again display their Machiavellian leanings
Remember all that talk about Nortel’s “greatest asset being its people?” Well this week we found out once and for all that Nortel management does not share this view.
In their latest example of “the ends justify the means” actions Nortel management has apparently chosen to break the law and pay the fine instead of treating UK employees with the respect they deserve, simply because this option benefits management more!
The issue stems from the lack of a “90 day consultation period” which is the same as a notice period. Instead these employees, some of whom had been with the company for many years, were given 2 hours to pack up and get out. While Nortel has been doing this in North America ever since filing for Ch.11 over in North America they are allowed to do so while under Ch.11 protection.
In the UK it is a different story. Even while under Administration certain rules apply when laying off many employees one of which is that employees be given a 90 day consultation or notice period. However the fine for breaking this law is a mere £5000, much cheaper than actually having to follow the law and give employees the proper consultation period!
If Nortel management really cared about their employees they would follow the law. But we know that isn’t the case as demonstrated from previous incidents and so perhaps it wasn’t surprising that they decided to deliberately break the law and just opt to pay the measly £5000 fine instead!
This is yet another in a long line of incidents where Nortel has demonstrated contempt for those very employees that helped build company that they eventually destroyed. Even after you are laid off their game does not end there. Nortel HR in the US has been using questionable methods in order to trick laid off employees into signing away their right to severance by making some vague promise of allowing pensions to be accessed quicker. They are able to do this because they know the fragile financial position many employees are in. Instead of helping out in this situation they choose to exploit it for their own benefit. Their aim is to make sure as many employees sign away their right to severance as possible, so that the chances of them disrupting the Ch.11 proceedings are reduced.
It is also not surprising that they decided to hide behind their consultants to let them take care of the whole matter. This time they are using E&Y to deliver the layoff news because they don’t have the decency or respect to tell the employees themselves.
Nortel Downfall Part 11
Nortel Executives and BoD successfully argue in favor of bankruptcy bonuses. http://www.bloomberg.com/apps/news?pid=20601082&sid=a0TBFPiL4Luc
Nortel “Enhanced” Severance Package now on EBay
If you ever wanted your own Nortel severance package, there’s one up for bid on EBay right now. Nope, it doesn’t include KEIP, KERP or a real executive enhanced severance deal or any other bonuses but it does include a good amount of humor, wit and funny writing free of charge.
Sorry to see you go fellow employee, but glad to see you’re trying to make something out of nothing. (E.G. the nothing that management gave you for all your hard years of service)
Letter from Robert L. Kenas urging the court not to grant executive bonuses
Robert L. Kenas was a loyal and hardworking Nortel employees who received a severance package in December only to be betrayed by Mike Z and the rest of the executives when they prematurely filed for Ch.11 in order to ensure they could profit off the downfall of Nortel.
A few days ago he wrote an impassioned letter to the court urging them not to reward incompetence, greed and downright unethical behavior. Please read it.
The letter clearly outlines in plain language the hardships that have been forced upon the rank and file. It also clearly outlines the malicious and deviant behavior of upper management in their attempts to obtain as much money from the carcass of Nortel as possible, all while mistreating, lying and defrauding loyal employees. (See their latest attempt to defraud laid off employees by trying to trick them into signing away their right to go to court for severance!)
Unfortunately as is so often the case in society nowadays the court ignored his message and decided to go with the big guys. In retrospect he had little chance of imparting any influence thanks to the high priced lawyers the executives hired using company money in order to argue their case.
Nonetheless, I stand and I applaud you Mr. Kenas. You’ve said exactly what is on the mind of so many neglected and abused employees and even though the court may have ignored you, there are many out there who have not.
Nortel management follows the path of AIG in rewarding incompetence (But wait it gets worse)
In a stunningly shameless move that reeks of the consistent greed that Nortel management has displayed, executives won the right to receive $7.3 million in bonuses at a time when rank and file employees are being told their severance won’t be honored and their pension is at risk.
The $7.3 million will be distributed as follows: $5 million would go to 5 executives in the US ($1 million per person on average), with the remaining $2.3 million going to 3 executives in Canada.
This is all part of the fraud that is KEIP bonuses which I talked about earlier. Previously the court had turned down Nortel’s request for KEIP for the senior leadership (the 8 executives who will receive the $7.3 million above) because the creditors wanted to see the non existent business plan before allowing more money to be flushed down the toilet with these executives.
Well, it turns out Nortel executives would have none of that as they believed they were entitled to the bonuses even if they were too incompetent to come up with a business plan. So they hired the best lawyers (using Nortel funds of course) to pull the wool over the court’s eyes and get their treasured bonuses approved. This was predicted by Nortel Downfall Part 9 but again I stress the goals of Nortel Downfall are parody, humor and exaggeration, not fact. This goes to show the level of absurdity the executive is willing to stoop to in order to enrich themselves.
KEIP has been something that has worried me ever since I first read about it in the initial BK filing back in January. Back then we did not know the details but we knew it had the potential to provide an incentive for the executive to further destroy the company and profit off the downfall at the same time. When the details became known it was clear that they had been planning for quite some time.
The goals that the executive have to accomplish in order to gain their bonus are laughable. Basically everything is tied to cost cutting, especially in North America. If they layoff more employees and revoke more severance they cut costs and thus directly benefit off of the hardships of others. In fact laying off more loyal employees benefits them more since the longer working employees will have larger amounts of severance to revoke and thus are better targets for cost cutting. This sort of behavior is NO DIFFERENT from the scumbag actions of AIG executives, other than the scope being smaller. Don’t think for a second that these losers wouldn’t enrich themselves with a government bailout if given the chance.
These sentiments were echoed this morning by Ms. Diane Urquhart who had the opportunity to appear on Canada’s AM news program to highlight the corruption of executives in their scheme to profiteer off of this whole fiasco. Please watch the video for the full story. Some have said her criticism was harsh. I say that her commentary was quite restrained, considering the circumstances! It’s about time these crooks received their deserved shame.
With all the news of the recent week it is becoming clear that Ch.11 was a ploy from the beginning to ensure that executives would continue to profit no matter what the outcome. Consider for example what would have happened if Ch.11 had not been declared: With the poor Q4 2008 results it’s likely no one would have received much of a bonus since bonuses are normally tied to performance.
Realizing this, management decided to opt for Ch.11, screwing over countless employees all so that they would have a chance to continue getting bonuses. Under Ch.11, the game changes: The normal rules no longer apply. Rather than having to make their case for bonuses to shareholders all they need to do is convince a judge that they deserve the bonus. As we can see, it’s much easier to do this! Essentially management has rewritten rules to ensure that they always come out on top no matter what.
What’s even more insulting is the fact that Nortel management claims they need the bonuses to improve morale. But whose morale are they talking about? Certainly giving big $$$ to executives improves their morale, but it has the exact opposite effect on the rank and file. Just how would you feel if your hard earned severance had been revoked, only to see it redistributed “up the food chain” to some useless and incompetent executive just so he/she could get a second summer home?
Furthermore the argument that bonuses are needed to “retain top talent” is a joke. There is no “top talent” among the executives. If there was, we wouldn’t be in this situation. I dare any of the executives to leave and try to find another job elsewhere, especially in this economy. I’m sure a prospective employer would love to see your resume: “Nortel – XXXX-2009: Responsible for driving the final nail through the coffin of this company“
The impotent BoD deserves just as much shame as the executives. It was their inaction and their unwillingness to rein in the management that directly contributed to this crisis. They are clearly in the mindset that being on the Nortel BoD means you are on a gravy train and can collect your 6 figure paycheck without doing much. Management seems to understand this so it’s no wonder that the BoD hired their own lawyer to argue in favor of the executives:
“The board cannot properly function without the advice of its senior, experienced, leadership team,” Lyndon Barnes, a lawyer for the Nortel board, told the judge in Toronto. “This is an enormously complicated task.”
John Manley is perhaps the best example of the uselessness of the BoD. This man collects $215,000 for his “part time job” as a Nortel director (see SEC 10K filing here), while his full time job is at McCarthy Tetrault, a law firm that is also coincidentally representing the most criminal Frank Dunn! Not surprisingly, Frank Dunn has his fingers in this whole mess too and is arguing that Nortel should pay for his legal fees in his upcoming trial for being the biggest fraud at Nortel!
Not surprisingly the Nortel Propaganda machine was out in full force today trying to spin this story of excess and greed in to one of universal reward for all employees:
“First of all, it is important to note that the vast majority of employees at all levels are already on a quarterly incentive plan aligned to the short-term goals of company,” said Nortel spokesman Mohammed Nakhooda.
The incentive plan mentioned here is the Annual Incentive Plan (AIP) and it is basically going to be leftovers compared to what the executives are making. A few million is basically spread over the rest of the 19,000 employees resulting in a few hundred dollars.
Nortel Downfall Part 10
Rumors of Nortel entering into asset sales are dismissed in the latest Zmail.
http://www.allaboutnortel.com/2009/03/12/mike-zs-newest-e-mail/
