Nortel intends to reduce its workforce by an additional net 3200 positions worldwide over the next several months (in accordance with local country legal requirements). These new reductions are on top of the 1800 remaining reductions from previously announced plans that require completion.

“There
is nothing more difficult than notifying employees, and Nortel is
extremely conscious of the personal financial burden this will cause
affected employees and their families,” said Mike Zafirovski, Nortel
president and CEO. “Nortel is a company driven by people and
innovation. But with the unprecedented economic environment and
resultant impacts on revenues, significant changes are required to
regain our financial footing. Tough decisions are being made to
restructure the company and work towards a successful emergence from
creditor protection.”



As
previously announced, Nortel is in the process of preparing a
comprehensive business and financial restructuring plan with the goal
of emerging from the creditor protection process as a more focused and
competitive company. It says it is working with several
parties—including its creditors—to define the best plan forward to
present to the courts. Nortel is taking the initial steps just
announced in a “disciplined fashion” to ensure it has “appropriate
resources to fully serve its customers”.



Employee compensation program changes

The
board of directors has approved management’s recommendation to not pay
any bonuses under the Nortel Annual Incentive Plan (AIP) for 2008. In
addition, Nortel is seeking Canadian court approval to terminate its
equity-based compensation plans, including all outstanding equity under
the plans (including stock options, restricted stock units and
performance stock units), whether vested or unvested, and no further
equity will be awarded in 2009.



Nortel
will continue its AIP in 2009 for all eligible full- and part-time
employees. The plan is being modified to permit quarterly rather than
annual award determinations and payouts. This will provide a more
immediate incentive for employees upon the achievement of critical
shorter-term corporate performance objectives, including specific
operational metrics in support of customer service levels as the
company works through its business and financial restructuring. The
company will seek to implement—and request court approval where
required—retention and incentive compensation for certain key eligible
employees deemed essential to the business while under court protection.



CLICK HERE for information about Nortel’s restructuring process.