A Canadian court has allowed eight senior executives at Nortel
Networks Corp to share in the bonuses the telecom equipment maker plans
to pay out even as it fights for survival in bankruptcy protection.
Nortel already had court approval to pay out a total of $45 million in
bonuses for close to 1,000 executive and nonexecutive employees.
Friday’s ruling by the Ontario Superior Court makes the eight senior
executives, who do not include Chief Executive Mike Zafirovski,
eligible to receive a share of this money, company spokesman Mohammed
Nakhooda said.
In addition to the $45 million, Nortel has a
separate quarterly bonus plan in place for “the vast majority of
employees at all levels,” he added.
Nortel – North America’s
biggest maker of telephone gear – had argued in an earlier court report
that the bonuses were needed because “the commitment and retention of
key employees will be essential to the execution of a restructuring of
Nortel”.
Executive compensation has become a hot-button issue
with investors and politicians alike, particularly amid revelations
that U.S. insurance giant American International Group paid out $165
million in bonuses after receiving $180 billion in government aid.
Some companies, including all of Canada’s large banks, have introduced
nonbinding shareholder votes on executive compensation in a bid to
provide greater transparency and more accountability.
Toronto-based Nortel filed for bankruptcy protection in January,
blaming the economic crisis for derailing a turnaround effort that
began in 2005.
It had about $2.4 billion in cash when it sought protection and about $4.5 billion in long-term debt.
Nortel shares were unchanged at 10 Canadian cents on the Toronto Stock
Exchange Friday. In mid-2000, at the height of the company’s success,
they were worth more than C$1,100 each, adjusted for a stock
consolidation that took place in 2006.
