Should the Nortel Downfall videos have been removed?
Update: The videos have been restored based on the overwhelming response received. Thank you for your feedback.
Based on feedback I thought the best way was to take a poll to get an idea of what people thought of the videos. Please take some time to provide your vote.
Removing the Nortel Downfall Videos
Update: The videos have been restored due to public popularity for them.
The Nortel Downfall videos were created as a way to provide some much needed entertainment and morale for employees during this tough time. With layoffs looming and the future uncertain laughter is sometimes the best medicine. Sometimes even the smallest of things can brighten a person’s day.
However it seems that lately they have been accomplishing the exact opposite. This was never the intention and for that I apologize.
Additionally, Bo (Gowan) and Jay (Barta) are both loyal and hardworking Nortel employees and I do not want to be seen as pitted against them. Because of these reasons I am doing the right thing and removing the Nortel Downfall videos from public viewing.
Please feel free to provide your comments.
Nortel Downfall Part 8: Prologue
Part 8 takes a look back at some of the events on the path to downfall.
Sources:
http://www.newsobserver.com/104/story/545938.html
http://www.newsobserver.com/104/story/710310.html
http://www.newsobserver.com/104/story/546196.html
http://www.newsobserver.com/104/story/549240.html
http://www.allaboutnortel.com/2007/09/19/hackney-gets-major-promotion/
The truth behind KEIP: How the executive plans to profit off the downfall of Nortel
KEIP, by now you’ve probably heard of this infamous term. It stands for a Key Executive Incentive Program and it is a way that companies in Ch.11 typically manage to continue to hand out bonuses to executives and other members of senior management.
Why on earth would you continue to give bonuses to the very people who lead the company into Ch.11 in the first place? Well, the idea is that because the company is in such a fragile position an “incentive plan” is needed for “key employees” so that they don’t leave for greener pastures, causing a death spiral. This idea isn’t completely without merit but in the case of Nortel it is damn near a crime and a further slap in the face of the many employees who have been terminated without severance!
Thanks go out to user felixmk at the AAN blog for taking the time to uncover this latest profiteering attempt by the executive team. They uncovered it by reading through the “Dockets” or court records of what is going on during the Ch.11 proceedings.
Here, I’ve presented a brief outline of what’s available in Docket 389 as it relates to KEIP and KERP in order to give an overview of what’s going on. But please read it yourself for the full picture!
Terms:
KEIP: Key Executive Incentive Plan. This is the one for the executives. It covers 92 executives: 8 members of the Senior Leadership Team (SLT), 82 members of the Executive Leadership Team (ELT) and 2 other officers. Total payout of KEIP is estimated to be $23 million.
KERP: Key Employee Retention Plan. This is the one for non executives and non insiders. This covers 880 employees of JCI 6, JCI 5 and JCI 4. Employees below JCI4 “will not be invited to participate” which of course means they don’t get anything. The 880 is split the following way: 200 JCI6, 538 358 JCI5 and 322 JCI4. Total payout under KERP is estimated to be $22 million.
Bonus Amounts: KEIP ensures the biggest bonuses go to the executives. Members of the SLT would be eligible for bonuses of 100%-183% of their annual base salary while members of the ELT would be getting 48%-112% of annual base as bonus. Considering these people already draw the biggest salaries at Nortel, you can see that the bonus money is heavily concentrated among them! Prime example of the rich getting richer!
KERP bonuses for JCI 6, 5 and 4 are a bit less impressive. JCI 6 will be eligible for a bonus of 26%-44%, JCI5 20%-35% and JCI4 13%. Again, nothing for people below JCI4.
Conditions of getting KEIP/KERP: KEIP is tied to 3 “milestones”:
1 – The achievement of North American objectives of Nortel’s cost reduction plans.
2 - The certain parameters that will result in a leaner and more focused organization.
3 – The confirmation by the court of the restructuring plan (in US and Canada) along with the completion of 1) and 2).
25% of KEIP would vest from completion of milestone 1), a further 25% upon completion of 2) and the remaining 50% would vest with milestone 3)
Notice how the milestones are worded: Basically, the executive achieve their goals and get big bonuses by laying off more employees! So, while they harp on about how much they “understand your pain” in reality they will benefit from it! Furthermore, milestone 3 is nothing more than a token goal that will likely be automatically fulfilled upon completion of 1 and 2, thus ensuring full payout of KEIP!
Note that this KEIP plan does not encourage the survival of Nortel. All of the goals aim to achieve is cost cutting! There is no mention of improving revenue, profit margins or making the business more healthy. Instead, there is a direct correlation between executive bonus and cost cutting, eg laying off more people without severance! So this makes it clear they do not care about Nortel the company but only themselves.
Payout of KERP is similar to KEIP however they are milestone dates that ensure payout as soon as these dates are met, regardless of whether the goals are met. For example by June 30th 2009 25% of KERP will be paid out no matter what, by December 31 2009 a further 25% will be paid out and by June 30th 2010 the remaining 50% will be paid out. These are guaranteed payouts.
This is the sort of stuff they don’t bother to tell you in the Zmails, GIS’s and other corporate communications. Instead they leave it up to YOU to find out this information yourself by wading through the tons of legal documents (Dockets) where they hope they can hide this clear evidence of their profiteering!
The Docket also shows that Nortel claimed that KEIP was needed in order to offset the benefits from the terminated equity plans. Such plans had no value before as they were tied to worthless NT stock! So their argument is pure nonsense. Furthermore, they talk about the need to improve morale when it has been clear that they have not cared about employee morale for some time. Additionally, Nortel has petitioned the court to get KEIP approved ASAP.
They act as if KEIP is needed to keep this executive team with Nortel, as if they they have lines of other companies waiting to poach the defective and ultimately destructive members of upper management! In reality, no company would want anything to do with these folks after seeing what they’ve done to Nortel. This exposes the reality behind KEIP: A last ditch attempt by the executive to extract the remaining money from the company for their own personal greed!
This is in fact the sad reality, KEIP is worse than we thought.
Richard Lowe: The Patronizer
Richard Lowe, President of Carrier Networks recently sent an email to all the employees under him in an attempt to demonstrate the same openness and transparency that Mike Z has: Link to All About Nortel article with the full text of the letter.
Let’s have a quick analysis of the contents:
The past several weeks have been the most challenging of my career, and no doubt they feel the same for many of you. While things are difficult from where I stand, I know that in many ways they are even more difficult for you and your families, and I thank you for hanging in there and continuing to fight this difficult battle together.
Translation: My bonus won’t be as big for 2008 so I’ll have to defer some spending, like a new beach house or something. Things must be way worse for you guys! To those we didn’t terminate: Thanks for sticking around and remember that we’ll fire you if we find you looking for an opportunity elsewhere.
I’ve now spoken with virtually all our tier one customers, and most of our tier two and three customers, and they are universally supportive of Nortel and the steps we’re taking.
Translation: Please don’t read the Q4 and Year End results due out on monday as they will reveal the full extent of our lies.
Despite our disappointment with Verizon’s phase 4 announcement, our LTE solution has gained traction with KDDI and TMO International. We must shake off any disappointment and focus on meeting our LTE program and trial milestones while we continue to explore partnership options for our LTE solution.
Translation: Please ignore the utter abject failures of upper management in destroying Nortel’s credibility and continue to work hard so that we executives can continue to extract every last penny, nickel and dime from this company.
Incentive programs like those announced today are aligned to both our creditor’s goals to quickly and cost effectively restructure the business, and our own to ensure that employees are encouraged to drive forward in the face of an extremely difficult environment.
Translation: Yay! KEIP will help make up for my bonus short fall this year! Guess things won’t be that bad for me after all!
I’d like to thank everyone that is being impacted for their many contributions to the company, and for the sacrifices they’ve made on Nortel’s behalf. I ask the rest of you to be supportive of these individuals at this difficult time and at the same time to remain focused on our business priorities as these changes take place, so that one day we can perhaps welcome our co-workers back to a revitalized and growing Nortel – one that the rest of us are tasked with recreating.
Translation: If you don’t continue to work blindly hard for us, you’re doing a great disservice to those terminated without severance! Yes, that makes perfect sense!
How this man can continue to lead is beyond me. This corporate shill ignorantly assumes that those betrayed and mistreated employees who were terminated without severance will be begging and crawling to rejoin Nortel CN under his leadership should any opportunity arise. He acts as if these people cannot live without Nortel and that Nortel is life for them. Furthermore, he even suggests that those remaining workers are wholly responsible for whether their laid off counterparts are given a chance to return! Yet another example of management shoveling the blame onto the rank and file.
Such behavior is more outrageous than any Youtube video someone could come up with!
Nortel Downfall Part 7
Part 7 has been rushed to production so that those laid off can have one last chance to watch it before the soulless executive ruthlessly terminates them without severance and kicks them out on to the street.
Irregardless of their hateful actions, don’t let them take away your dignity. YOU are who you are no matter what they’ve done to you or how shameful they have behaved. Don’t lose your pride!
Nortel management hires expensive consultants to let them decide on bonuses
In yet another stunning example of management’s corruption and their total willingness to absolve themselves from responsibility, today we have learned that Nortel executives have petitioned the court to hire Mercer “pay consultants”.
These consultants will cost the company anywhere from $225 to $800 an hour for their ridiculous services. In a time where severances have been cut and employees told to save every dollar, nickel and dime for the sake of the company this is yet another slap in the face of those most loyal to the company. First it was the news of Mike Z’s outrageous private jet usage at the cost of $1 million a month (yes $1 million, don’t believe that “incremental cost” BS) even after Nortel filed for Ch.11, and now this! How much more corruption will we learn of?
Here’s what the PRopaganda dept. had to say about it:
A Nortel spokesman added: “In order to execute a highly complex restructuring program, Nortel has sought counsel from experts with specific experience working with companies who have successfully managed their business while under creditor protection.”
Translation: We don’t know what we’re doing, but don’t worry we can throw money at the problem.
But wait, it gets worse:
The company says in the filing that Mercer has “substantial knowledge of (Nortel’s) current operational condition,” which could help it design an incentive plan for key employees.
So, the executive hires these outrageously priced consultants to let them determine how much the bonus should be for the “key employees” e.g. the executives themselves! Yet another devious trick to continue to profit off the downfall of this company!
But this is all part of their plan to wash their hands of any blame. Just like they blamed the decision to remove severance on the “financial advisors” that told them to do so, they will now happily accept huge bonuses even as Nortel flounders through BK protection and say “Hey, we didn’t decide who got bonuses, the consultants did!“
Fool me once, shame on you. Fool me twice…
With quiet news of layoffs that have taken place and rumors of more to come in the first week of March, morale has continued to fall. Management has done nothing to calm these fears and in fact their stunning silence is only bringing about more talk around the water cooler. If they would just be straightforward for once and stop treating us like children this would do much for their status and respect.
However the situation is more complicated than that. This Business Week article (written back on the date of the filing, so it may be out of date) claims a $300 million cash burn rate per quarter and $2.6 billion cash on hand for Nortel at the date of filing. But really, because of the secrecy of it all no one really knows. Nortel upper management seems to take secrecy and information control above all else, so as usual they are leaving employees in the dark and hoping they won’t find out.
This has left employees on their own, as they are now forced to peruse the Ernst & Young Court Monitor Documents on their own to try to find out what’s going on. This is causing more heartaches and more troubles as rumors start and spread due to things people infer from these reports.
My point is this: Upper management should be more forthcoming. But even if they were to start telling the truth right now, no one would believe them. I myself have witnessed many employees go through the phases of denial, first trying to ignore the situation and now expressing remorse and enmity for the lying actions of management. This is only natural. People are able to cope only so much with the type of stress the executive has caused.
No one believes them anymore. As you read their communiques each week you get a sense of deja vu because they are basically the same talking points thrown together with different corp/PR speak and padded with extra words to increase the length and make it seem like they care. Instead of focusing on spin, they should focus on the truth.
But as this letter so graciously points out, they have consistently shown contempt for the truth:
On October 16, in a video message to all Nortel employees discussing the upcoming announcements around restructuring, Mike Zafirovski said: “There are no current plans to change our guidelines around severance packages. …I do understand that the last few weeks have been extremely difficult for all of you. I can only assure you that these actions will be unfolded with the utmost respect for Nortel’s people.”
The weasel wording is detestable. “No current plans… to change… severance” This basically means that they decided to do away with severance right after writing this message and justify it by saying their financial advisers told them to do so. This highlights another feature of upper management: The total abdication of responsibility for the mess they’ve created.
Basically, when they say nothing is “imminent”, “current” or “planned” it most certainly means that very item is in the works! This is a simple yet effective rule for translating upper management corp/PR speak.
