Nortel Insider – by Desk Jockey

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)

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.

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.

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!

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!

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.

Well, if you thought that this video was just outrageous or funny or anything but real, you may be surprised by this story today: Nortel CEO won’t take a pay cut

For reference, take a look at the video about 1:30 into it.