Motorola cuts compensation and benefits package
The troubled phone maker says it is taking steps to trim employee and executive compensation and benefits, ranging from no 401(k) match to a salary freeze in 2009.
As the recession takes its toll, Motorola announced Wednesday that it is cutting compensation and benefits packages for its employees, including top executives.
Co-CEO Greg Brown will forgo a 2008 cash bonus earned under his incentive plan, while co-CEO Sanjay Jha will forfeit his cash bonus at a similar level as Brown's and take the remainder of his cash bonus in restricted stock.
Beginning in the new year, Motorola plans to suspend its matching 401(k) contributions, leaving employees to be the sole contributors to their 401(k) plans.
And a number of Motorola employees will face a salary freeze in the new year, with co-CEOs Brown and Jha taking a 25 percent cut to their base salary.
Beginning March 1, Motorola will permanently freeze its U.S. pension plan, preserving the vested benefits accrued by employees and retirees, but canceling future benefit accruals. The company, however, will continue to fund its pension obligations to current and future retirees.
"The sustained downturn in the global economy requires that we take these difficult but necessary steps," Brown and Jha said in a statement. "While serving our customers remains a top priority, we are equally focused on our cost structure, and we will continue to implement appropriate measures to conserve cash and reduce expenses."
The compensation hit is just the latest blow to Motorola, whose troubles reach back before the onset of the current economic crisis. Earlier this month, for instance, Standard & Poor's dropped the phone maker's credit rating to junk status.
Motorola fell 4.31 percent to $4.22 a share in early morning trading Wednesday.