Motorola’s Cost-cutting Attempt to Affect Workers
Succumbing to harsh economic climate, Motorola is taking steps to reduce
costs of running its business. The measures include changes to employee
compensation and benefit programs as well as changes to executive
compensation.
As part
of the overall cost reduction program, Motorola is revising its employee
compensation and benefit programs across the company. Effective March 1,
2009, Motorola will permanently freeze its U.S. pension plans,
preserving vested benefits accrued by employees and retirees but
eliminating future benefit accruals. Motorola intends to continue to
provide funding to meet its pension obligations to present and future
retirees.
"The
sustained downturn in the global economy requires that we take these
difficult but necessary steps," said Greg Brown and Sanjay Jha, co-chief
executive officers of Motorola. "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."
Effective January 1, 2009, the company will temporarily suspend all its
matching contributions to the Motorola 401(k) Plan. U.S. employees may
continue to contribute to the 401(k) plan but will not receive matching
contributions from Motorola.
Moreover, says Motorola, employees in many of the markets in which it
operates will not receive a salary increase in 2009. In addition,
Motorola co-chief executive officers, Greg Brown and Sanjay Jha will
voluntarily take a 25% decrease in base salary in 2009.
Greg
Brown will voluntarily forgo any 2008 cash bonus earned under the
Motorola incentive plan. Sanjay Jha's employment contract provides for a
guaranteed cash bonus for 2008. His bonus will also be voluntarily
reduced by an amount equal to Greg Brown's forfeited bonus and the
remainder will be taken in the form of restricted stock units.
The
company believes that these actions are expected to lead to cost savings
in addition to the $800 million that was previously announced on October
30, 2008.
