Insolvent Nortel Networks isn’t kidding about its plans to pay certain employees a hefty amount of cash if they’ll stick around during the company’s wind-down.
In an April 20 filing with the Securities and Exchange Commission, bankrupt Nortel, which has sloughed off its most valuable units at various auctions, said new CFO John Doolittle is eligible for an annual bonus of 100 percent his base salary.
Problem is, it’s not clear what the base totals — Nortel has not disclosed Doolittle’s compensation to the SEC. However, in August 2009, the Canadian Broadcasting Corp. reported that Doolittle, then-head of the corporate group, got a $1.12 million raise over his previous year’s earnings. The amount came to $1.68 million for 2009.
The news comes as Nortel faces intense criticism for handing out bonuses to employees rather than putting that money toward pensioners, retirees and unsecured creditors. About 1,475 employees stand to receive more than $92.4 million over the next two years. Nortel says most of the $92.4 million will come from service agreements with Ericsson, Ciena, Avaya and other companies that have purchased its assets at auction, but it has not said whether additional funding will come from creditor recoveries or company holdings.
Meanwhile, as bonuses flow, Nortel pensioners have had to fight hard just to keep their benefits through the end of this year. It’s not known what will happen to their health, life and other insurance after Dec. 31.
Doolittle, 46, has served as CFO for about one month. He took over the position from Pavi Binning on March 22. When Nortel went bankrupt in January 2009, Doolittle, who has worked for Nortel for years, held an executive officer position as the company’s treasurer.